To address a lack of consistency in fund balance reporting, GASB’s new Statement no. 54, Fund Balance Reporting and Governmental Fund Type Definitions, establishes a hierarchy of fund balance classifications based primarily on the extent to which a government is bound to observe spending constraints imposed upon how resources reported in government funds may be used (see “Official Releases,” May 09, page 85). The new standard is effective for financial statement periods beginning after June 15, 2010.

“Fund balance” is the difference between assets and liabilities in governmental fund financial statements. It is one of the most widely used pieces of information in state and local financial reports. Statement no. 54 distinguishes fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported under these classifications:


  • Restricted. Amounts constrained by external parties, constitutional provision, or enabling legislation.
  • Committed. Amounts constrained by a government using its highest level of decision-making authority.
  • Assigned. Amounts a government intends to use for a particular purpose.
  • Unassigned. Amounts that are not constrained at all will be reported in the general fund.


The new standards also clarify the definitions of individual governmental fund types. The final standard also specifies how economic stabilization or “rainy day” amounts should be reported.


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 The Federal Accounting Standards Advisory Board (FASAB) issued Statement of Federal Financial Accounting Concepts (SFFAC) 6, Distinguishing Basic Information, Required Supplementary Information, and Other Accompanying Information. The Statement amends SFFAC 2, Entity and Display, to provide guidance for use by FASAB in determining whether information should be basic information, required supplementary information (RSI), or other accompanying information (OAI).


Existing concepts provide FASAB with guidance on what information should be reported to achieve reporting objectives and identifies different methods that may be used to communicate it to readers, such as financial statements and management’s discussion and analysis (MD&A). SFFAC 6 expands the existing conceptual framework to provide a process FASAB may apply in selecting whether an item of information should be considered basic information, RSI or OAI.


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