gasb_54+article+on+fund+balance+reporting

gasb_54+article+on+fund+balance+reporting - 54 GASB The New...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
20 Tennessee CPA Journal | JUNE 2009 Statement of Governmental Accounting Standards No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, will significantly change the reporting of fund balance in the balance sheets of governmental type funds. GASB 54 is effective for financial statements for periods beginning after June 15, 2010 with early implementation encouraged. Therefore, governmental accountants and CPAs will need to quickly become familiar with the new fund balance reporting model. This article will provide an overview of the fund balance reporting that will be required by the new standard. First, a brief description of fund balance reporting prior to GASB 54 will be presented. This will be followed by an outline of the new requirements of GASB 54 and an example to illustrate the reporting of fund balance. Fund Balance Reporting Prior to GASB 54 The governmental funds are composed of five types of funds: 1) the General Fund, 2) Special Revenue Funds, 3) Capital Project Funds, 4) Debt Service Funds and 5) Permanent Funds. The basic balance sheet accounting model for governmental funds is: Assets = Liabilities + Fund Balance. Statement of Governmental Accounting Standards No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for state and local governments, required that the governmental funds report fund balance in two categories: 1) Reserved Fund Balance and 2) Unreserved Fund Balance. The Reserved Fund Balance reports dollar amounts that have been appropriated and for which resources have already been committed, such as inventories on hand, prepaid expenditures and encumbrances. The Unreserved Fund Balance is the residual amount that is still available for further expenditure. Occasionally, governmental entities will also segregate the Unreserved Fund Balance into two subsections: 1) designated and 2) undesignated. The designated portion of unreserved fund balance was used to communicate to the reader of the financial statements that certain projects had been identified that might require future spending, such as possible expansion of the current water and sewer system. Over time, inconsistencies were observed in the reporting of fund balance by state and local governmental entities. In addition, some users perceived a lack of transparency in the way fund balance was reported. They were concerned with the restrictions that had been placed on the use of current government resources. Frequently, it was not apparent at what decision-making level the restrictions had been imposed and by what authority. Therefore, the GASB added to its agenda the fund balance reporting project. After issuing the 2006 invitation to comment and the ensuing 2008 exposure draft, the GASB voted to adopt Statement No. 54 in 2009.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern