HomeMy WebLinkAboutSUMMARY FORM FR/SRFA --
AGENDA ITEM SUMMARY FORM
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FILE ID: rd -0098q
Date: 6/24/2010 Requesting Department: Finance Law Department
Commission Meeting Date: 9/16/2010 District Impacted: Matter ID No.
Type: ❑ Resolution ® Ordinance ❑ Emergency Ordinance ❑ Discussion Item
❑ Other
Subject: To amend the City's Financial Integrity Principles to properly reflect fund balance
classifications as required by Statement No. 54 of the Government Accounting Standards Board (GASB)
— Fund Balance Reporting and Governmental Fund Type Definitions
Purpose of Item:
In February 2009, The Government Accounting Standards Board (GASB) issued Statement No. 54
which establishes accounting and financial reporting standards for all governments that report
governmental funds. It establishes criteria for classifying fund balances into specifically defined
classifications and clarifies definitions for governmental fund types. This item is necessary in order
to change the current fund balance categories listed in the financial integrity principles to coincide
with the new fund balance categories required in the Comprehensive Annual Financial Report
(CAFR) by the GASB.
Background Information:
See Attached.
BudEet Impact Analysis
NO Is this item related to revenue?
NO Is this item an expenditure? If so, please identify funding source below.
General Account No:
Special Revenue Account No:
CIP Project No:
NO Is this item funded by Homeland Defense/Neighborhood Improvement Bonds?
Start Up Capital Cost:
Maintenance Cost:
Total Fiscal Impact:
CIP
Final Approvals
(SIGN AND DATE)
Budget
If using or receiving capital funds
Grants Risk
Purchasing/1 Dept
Chief City
Pagel of 2
Background Information:
The objective of GASB Statement 54 is to enhance the usefulness of fund balance information by
providing clearer fund balance classifications that can be more consistently applied and by clarifying the
existing governmental fund type definitions. This Statement establishes fund balance classifications that
comprise a hierarchy based primarily on the extent to which a government is bound to observe
constraints imposed upon the use of the resources reported in governmental funds.
The initial distinction that is made in reporting fund balance information is identifying amounts that are
considered nonspendable. This Statement also provides for additional classification as restricted,
committed, assigned, and unassigned based on the relative strength of the constraints that control how
specific amounts can be spent.
The restricted fund balance category includes amounts that can be spent only for the specific purposes
stipulated by constitution, external resource providers, or through enabling legislation. The committed
fund balance classification includes amounts that can be used only for the specific purposes determined
by a formal action of the government's highest level of decision-making authority. Amounts in the
assigned fund balance classification are intended to be used by the government for specific purposes but
do not meet the criteria to be classified as restricted or committed. In governmental funds other than the
general fund, assigned fund balance represents the remaining amount that is not restricted or committed.
Unassigned fund balance is the residual classification for the government's general fund and includes all
spendable amounts not contained in the other classifications. In other funds, the unassigned
classification should be used only to report a deficit balance resulting from overspending for specific
purposes for which amounts had been restricted, committed, or assigned. Governments are required to
disclose information about the processes through which constraints are imposed on amounts in the
committed and assigned classifications.
Governments are also required to classify and report amounts in the appropriate fund balance
classifications by applying their accounting policies that determine whether restricted, committed,
assigned, and unassigned amounts are considered to have been spent. Disclosure of the policies in the
notes to the financial statements is required.
The requirements in this Statement will improve financial reporting by providing fund balance
categories and classifications that will be more easily understood. Elimination of the reserved
component of fund balance in favor of a restricted classification will enhance the consistency between
information reported in the government -wide statements and information in the governmental fund
financial statements and avoid confusion about the relationship between reserved fund balance and
restricted net assets. The fund balance classification approach in this Statement will require
governments to classify amounts consistently, regardless of the fund type or column in which they are
presented. As a result, an amount cannot be classified as restricted in one fund but unrestricted in
another. The fund balance disclosures will give users information necessary to understand the processes
under which constraints are imposed upon the use of resources and how those constraints may be
modified or eliminated. The clarifications of the governmental fund type definitions will reduce
uncertainty about which resources can or should be reported in the respective fund types.
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