GASB Statement 54 Fund
Balance Reporting and
Governmental Fund Types
deene.dayton@state.sd.us
773-5932
1
Intro
Statement No. 54
Released March 11, 2009
Effective for periods beginning after June 15,
2010
2
Intro
Why??
Significant variation on how current standards
were applied
Widespread confusion about terminology
Fund balance is an important benchmark for
numerous laws and other applications
3
Current F/B

Fund balance is a term used for assets minus
liabilities in a “governmental” fund
4
Current F/B

Reserved F/B

Resources not available for spending



Reserve for inventory
Long-term loan receivable
Legal restrictions on spending


Restriction narrower than the purpose of the fund
itself
Bond covenants
5
Current F/B

Designated F/B

Management’s intended future use of resources


Designated for future projects
F/B applied to subsequent year’s budget
6
Current F/B

Unreserved, Undesignated F/B


What’s left
May even represent what’s left in a Special
Revenue Fund
7
Current Proprietary

Net Assets –



Invested in Capital
Restricted
Unrestricted
8
New F/B - Listing





Nonspendable
Restricted
Committed
Assigned
Unassigned
9
New F/B - Nonspendable

Not in spendable form, such as:




Inventory
Long-term loans and notes receivable
Prepaids
Amounts legally or contractually required to
be maintained intact

The principal balance of a permanent fund
10
New F/B - Restricted

Same definition as for net assets in Statement
34 – when constraints are placed on resources
in the following manner –

External parties




Debt covenants
Contributors
The constitution
State law (CO, SPED, Pension)
11
New F/B - Committed



Amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action of
the highest level of decision making authority
(governing board)
Constraint can be removed or changed only by the
same body (governing board)
Action to constrain resources should occur prior to
the end of fiscal year, though the exact amount may
be determined subsequently
12
New F/B - Assigned


Amounts that are constrained by the
government’s “intent” to be used for specific
purposes
Intent is expressed by –


The governing body
A body or individual to which the governing body
has delegated the authority to assign amounts to
be used for specific purposes
13
New F/B - Assigned


Constraints imposed on the use of assigned
amounts are more easily removed or modified
than those imposed on amounts that are
classified as committed.
Some governments may not have both
committed and assigned fund balances, as not
all governments have multiple levels of
decision-making authority.
14
New F/B - Assigned


By reporting particular amounts that are not
restricted or committed in a special revenue,
capital projects, debt service, or permanent
fund, the government has “assigned” those
amounts to the purposes of the respective
funds.
In other words, the non-general funds will
only have an unassigned balance if it is
negative.
15
New F/B - Assigned

Governments should not report an assignment
for an amount to a specific purpose if the
assignment would result in a deficit in
unassigned fund balance.
16
New F/B - Assigned


An appropriation of existing f/b to eliminate a
projected budgetary deficit in the subsequent
year’s budget (cash applied) satisfies the
criteria to be classified as an assignment of
fund balance.
An assigned f/b is created if the proposed
budget at the May meeting contains “fund
balance applied” in the General Fund.
17
New F/B - Assigned

GASB believes that an appropriation of
existing fund balance does not meet the
criteria for a commitment because the
government does not have to take action to
remove the constraint---it expires at the end of
the budgetary period.
18
New F/B - Assigned

Amounts eartagged for cash flows (Gen):



B. M. initiated – not reported separately
B. M. generated pursuant policy – assigned
B. M. generated and adopted by the governing
board – committed (formal action of committing
must be prior to June 30th)
19
New F/B - Unassigned


The residual classification for the General
Fund.
In other governmental funds, if expenditures
incurred for specific purposes exceeded the
amounts restricted, committed, or assigned to
those purposes, it may be necessary to report
a negative unassigned f/b.
20
New F/B - ALL

A government should determine the
composition of its ending fund balance by
applying its accounting policies regarding
whether it considers restricted or unrestricted
amounts to have been spent when an
expenditure is incurred for purposes for which
both restricted and unrestricted amounts are
available. The policy must be included in the
notes to f/s.
21
New F/B - ALL

The amount that should be reported as
nonspendable f/b should be determined before
classifying amounts in the restricted,
committed, and assigned f/b classifications.
22
New F/B - ALL

In a governmental fund other than the General
Fund, expenditures incurred for a specific
purpose might exceed the amount in the fund
that are restricted, committed or assigned to
that purpose and a negative residual balance
for that purpose may result. If that occurs,
amounts assigned to other purposes in that
fund should be reduced to eliminate the
deficit.
23
New F/B - ALL



Restricted
Committed
Assigned
Incorrect
100,000
-50,000
200,000
Correct
100,000
-0150,000
24
New F/B - ALL

A negative residual amount should not be
reported for restricted, committed or assigned
fund balances in any fund.
25
New F/B - Display

The following components of f/b:



Two components of nonspendable
Major restricted purposes
Specific purposes of committed and assigned
The preceding may either be reported
separately in the f/s’s or aggregated in the f/s’s
and disclosed in the notes
26
New F/B - Disclosures

The disclosures for committed f/b should
identify the government’s highest level of
decision making authority AND the formal
action that is required to be taken to establish
a f/b commitment
27
New F/B - Disclosures

The disclosures for assigned f/b should
identify the body or official authorized to
assign amounts to a specific purpose AND the
policy established by the governing body
pursuant to which that authorization is given.
28
New F/B - Disclosures

If a governing body has established a
minimum f/b policy, then the policy should be
described in the notes to f/s
29
Fund Balance
BEFORE GASB 54
General
Fund
Capital
Outlay
Fund
Special
Education Pension
Fund
Fund
Fund Balances:
Reserved for Inventory of Supplies
Unreserved:
Designated for:
Cash Flow
FY10 Budget
Unreserved, Undesignated
700,000
80,000
0
100,000
20,000
300,000
17,000
Total Fund Balances
800,000
420,000
Impact
Aid
Fund
20,000
130,000
10,000
400,000
17,000
130,000
410,000
420,000
17,000
130,000
420,000
17,000
130,000
AFT ER GASB 54
Fund Balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
20,000
790,000
400,000
1,210,000
30
Note:Cash flow is calculated by B.M. pursuant standing board adopted policy.
Fund Types – Special Revenue


Special revenue funds “are used” to account
for and report the proceeds of specific revenue
sources that are restricted or committed to
expenditure for specified purposes.
The proceeds of specific revenue sources
should be the foundation for a special revenue
fund.
31
Fund Types – Special Revenue

Special revenue funds should not be used to
account for resources held in trust for
individuals, private organizations, or other
governments. (private purpose trust)
32
Fund Types – Special Revenue

The restricted or committed proceeds of
specific revenue sources should be expected
to continue to comprise a substantial portion
of the inflows reported in the fund.
33
Fund Types – Special Revenue

Note disclosures should disclose the purpose
of each major Special Revenue Fund as well
as identifying which revenues are reported in
each of these funds.
34
Special Revenue – Impact Aid

Impact Aid is special revenue but it is not
spent on a special purpose so it technically is
not a special revenue fund.

But state law (SDCL 13-16-31) references a
separate Impact Aid fund.
35
Special Revenue – Impact Aid



When a GAAP/Compliance conflict exists,
we try to satisfy both
Maintain a separate Impact Aid Fund
throughout the year……blend it with the
General Fund for year end financial reporting
Note – Transfers from the Impact Aid Fund to
non-General Funds would be reported as a
transfer out of the General Fund (permissible
under SDCL 13-16-26.2)
36
Special Revenue – Impact Aid




All funds are required to be budgeted (SDCL 13-112), such as General, Impact Aid, CO…
GASB requires budgetary RSI for General and major
special revenue funds
Impact Aid is not a GASB recognized major special
revenue fund so it will not be reported as budgetary
RSI
General Fund budgetary RSI will include only the
budgeted General fund and not any blended Impact
Aid amounts (explain in notes to RSI)
37
Fund Types – Capital Projects


To account for the expenditure on capital
outlays, including the acquisition or
construction of capital facilities and other
capital assets. (broader definition)
Should not be used for capital-related
outflows of proprietary funds.
38
Fund Types – Capital Projects

Although the use of a capital projects fund is
not required, its application will prevent
distortions of trend data in an entity’s
operating funds.
39
Fund Types – Debt Service


To account for financial resources that are
restricted, committed or assigned to
expenditure for principal and interest.
All debt does not trigger/mandate the use of a
debt service fund…….however
40
Fund Types – Debt Service


Debt service funds “should be used” to report
resources if legally mandated.
Debt service funds “should be used” to
account for resources that are being
accumulated for principal and interest
maturing in future years.
(term bond)
41
Fund Types – Permanent


“Should be used” to account for resources that
are restricted to the extent that only earnings,
and not principal, may be used for purposes
that support the reporting government’s
programs.
Not to include private purpose trust money
that is for individuals, private organizations,
or other governments.
42
Food Service

INVENTORIES



REVENUES


171 Purchased
172 Commodities
4820 Donated Food
EXPENSES


461 Purchased
462 Donated
43
Food Service

Commodities are being received as processed
foods or on a system called Net Off Invoice
(NOI)

Inventorying of commodities is challenging
because they are now marked with
commercial labels.
44
Food Service

The food service program now allows for
Single Inventory Record Keeping

Both the 171 Purchased Food and the 172
Commodity asset accounts may be aggregated
into the 171 account and labeled “Food
Inventory”.
45
Food Service

The 4820 Donated Food revenue account
would not change. Processed food and NOI
purchases will reflect the commodity content.
46
Food Service

Without a separate 172 commodity asset
account, a district will no longer be able to do
a COGS for commodities. It is now allowable
to determine the commodity expense (462
Donated) by assuming that the amount
received will equal the amount consumed.
47
Food Service

The commodity expense account is not only
needed for reporting on Exhibit VI, but it also
is reported on the cash flows statement and on
SEFA.
48
Food Service
462 Donated Food (expense)
4820 Donated Food (revenue)

To record the value of commodities received.
49
Food Service
461 Purchased Food (expense)
Cash
To record the delivery of purchased food.
50
Food Service
461 Purchased food (expense)
171 Food Inventory (to adjust inventory down)
171 Food inventory (to adjust inventory upward)
461 Purchased food (expense)
After ending inventory is taken, the above entries will
adjust the inventory account up or down accordingly.
Food expense is reported on the “consumption
basis”.
51
Food Service

Schools may implement the Single Inventory
Record Keeping Approach at the start of any
school year or inventory records may be
maintained as you always have in the past.
52
GASB Update

Codification of Pre-November 30, 1989,
FASB pronouncements
Exposure Draft Stage
53
GASB UPDATE

Economic Condition Reporting
Should additional data be included into a
financial report so that a better assessment of
financial sustainability may be made
54
GASB Update
Accounting and Financial Reporting for
Service Concession Arrangements (SCA’s)
(Public/Private partnerships)

Exposure Draft Stage
55
GASB Update
Statement 14 Reexamination
(the financial reporting entity)

Exposure Draft Stage
56
GASB Update

Proposed Suggested Guidelines for Voluntary
Reporting, Service Efforts and
Accomplishments (SEA) Performance
Information
Proposal Stage
57
GASB Update

Pension Accounting and Financial Reporting
Invitation to Comment Stage
58