1. Presented by Donna Denker, CPA Donna Denker & Associates

2.  1.) Brief description of fund balance reporting prior to GASB 54  2.) Outline of the new requirements  3.) Effective Date

3.  Two categories to allocate fund balance.  --Reserved  --Unreserved  -Designated  -Undesignated

4.  As a result of the new standard…  a.) Fund balance financial reporting will become more detailed.  b.) The increased disclosures will aid the user of the financial statements in understanding the availability of resources.  c.) Only applies to the governmental funds.  d.) No changes to the reporting of net assets for government-wide and proprietary statements.  e.) Effective for periods beginning after June 15, 2010

5.  1.) Non-spendable Fund Balance  a.) Generally means that it is not expected to be converted to cash.  b.) Amounts that cannot be spent due to form  -Inventories  -Prepaid Items  -Long-term loans and notes receivable  c.) Amounts that must be maintained intact legally or contractually

6.  2.) Restricted Fund Balance  a.) Amounts constrained for a specific purpose by external parties, constitutional provision, or enabling legislation.  b.) Essentially the same definition used by GASB Statement no. 34, for restricted net assets.

7.  3.) Committed Fund Balance  a.) Amounts constrained for a specific purpose by a government using its highest level of decision-making authority.  b.) It would require action by the same group to remove or change the constraints placed on the resources.  c.) Action to constrain resources must occur prior to year-end; however, the amount can be determined in the subsequent period.

8.  4.) Assigned Fund Balance (Essentially what was designated)  a.) For all governmental funds other than the general fund, any remaining positive amounts not classified as non-spendable, restricted or committed.  b.) For the general fund, amounts constrained for the intent to be used for a specific purpose by a governing board or a body or official that has been delegated authority to assign amounts. Amounts reported as assigned should not result in a deficit in unassigned fund balance.

9.  5.) Unassigned Fund Balance (essentially what was unreserved, undesignated)  a.) For the general fund, amounts not classified as non-spendable, restricted, committed or assigned. The general fund is the only fund that would report a positive amount in unassigned fund balance.  b.) For all governmental funds other than the general fund, amount expended in excess of resources that are non-spendable, restricted, committed or assigned (residual deficit). In determining a residual deficit, no amount should be reported as assigned.

10.  a.) A government policy on the order in which resources are to be expended is an important factor in how amounts are reported in fund balance.  b.) This policy now applies at the fund level for restricted and unrestricted (committed, assigned or unassigned) resources.  c.) A government should establish a policy on the order in which unrestricted resources are to be used when any of these amounts are available for expenditure. If a government does not establish a policy, the default approach assumes that committed amounts should be reduced first, followed by the assigned amounts, and then the unassigned amounts.

11.  d.) Governments must consider the impact on the components of fund balance when determining their policy on which funds are used first.  e.) For most governments, determining the components of fund balance will be an annual exercise.  f.) The first step is to determine the amount that should be reported as non-spendable.  g.) For all but the general fund, the remaining amounts must be allocated to restricted, committed or assigned by reviewing the constraints placed on available resources and by applying the order of spending policy just discussed.

12.  Governments will be required to disclose more information about amounts reported in fund balance:  a.) Description of authority and actions that lead to committed and assigned fund balance.  b.) The government’s policy regarding order of spending regarding restricted and unrestricted fund balance and the order of spending for committed, assigned and unassigned.  c.) For any stabilization arrangements, the authority for establishing, requirements for additions, and the conditions under which amounts may be used. If not reported on the face of the financial statements, the stabilization balance.

13.  d.) Description of any formally adopted minimum fund balance policies.  e.) The purpose of each major special revenue fund and which revenues or other sources are reported in each of those funds.  f.) Encumbrances, if significant, are reported in conjunction with other disclosures of significant commitments

14.  GASB 59 Financial Instruments Omnibus  GASB 58 Accounting and Financial Reporting for Chapter 9 Bankruptcies  GASB 57 OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans  GASB 56 Codification of Financial and Reporting Guidance Contained in the AICPA Statements on Auditing Standards  GASB 55 The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments  GASB 54 Reporting Governmental Fund Balance  GASB 53 Accounting and Financial Reporting for Derivative Instruments  GASB 52 Land and Other Real Estate Held as Investments by Endowments  GASB 51 Accounting and Financial Reporting for Intangible Assets