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County of Riverside ■ Office of the Auditor-Controller1
Fund Balance Reporting Requirements(GASB 54 Impact)
Presented to the City Councilby
Lena H. EllisFinancial Management Services Director/ CFO
September 27, 2011
County of Riverside ■ Office of the Auditor-Controller2
Presentation Objective:
Provide briefing on Governmental Accounting Standards Board (GASB) Statement No. 54 requirements and impact;─ M&C G-17398
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller3
Background
Effective For Fiscal Year 2011/2012
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller4
Fund Balance – Current/Future Standard
What is Fund Balance? Difference between assets and liabilities
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller5
Fund Balance – Current StandardHow do we allocate Fund Balance? Reserved Unreserved
─Designated─Undesignated
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller6
Fund Balance – Current Standard
Traditional focus = Fund resources available for appropriation (budgeting)
Reserved Fund Balance = Not available Unreserved Fund Balance = Available
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller7
Fund Balance – Current Standard
Reserved Fund Balance = Not available Legal restrictions impose a limitation on purpose
of the fund Resources not available for spending in the current
year’s budget. . Example: Encumbrances, Advances to other funds
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller8
Fund Balance – Current Standard
Designated Fund Balance – intended use of resources by management or governing body.
Example: Risk Management, Group Health Insurance
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller9
Fund Balances:Reserved for Encumbrances 6,168$ Reserved for Inventories 3,448 Reserved for Advances 5,966 Reserved for Prepaids, Deposits, and Other 532 Unreserved, Designated for Authorized Expenditures:
Risk Management 11,844$ Workers Compensation 3,993 Unemployment Insurance 256 Group Health Insurance 24,975 Culture & Tourism 15,692 Other Designations 600
Total Unreserved, Designated 57,360 General Fund
Unreserved:General Fund 58,794 Total Fund Balances 132,268$
June 2011 Financial Management Report
CITY OF FORT WORTH, TEXASFUND BALANCEGENERAL FUND
JUNE 30, 2011(in 000's)
FUND BALANCE AS STATE IN
County of Riverside ■ Office of the Auditor-Controller10
New Fund Balance Classifications
Components of fund balance: Non-spendable Restricted Committed Assigned Unassigned
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller11
New Fund Balance Classifications
Non-spendableRestricted Essentially what is now reserved fund balanceCommitted
Assigned Essentially what is now designatedUnassigned Essentially what is unreserved fund balance
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller12
New Fund Balance ClassificationsNon-spendable Fund Balance
Not in spendable form─Cannot ever be spent (e.g., supplies inventories and
prepaid)─Cannot currently be spent (e.g., the long-term
portion of loans receivables) Legally or contractually required to be
maintained intact (e.g., principal of an endowment fund)
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller13
New Fund Balance ClassificationsRestricted Fund Balance
Amounts constrained to being used for a specific purpose by:
– External parties (i.e., creditors, grantors, contributors, or laws or regulations of other governments)
– Imposed by law through constitutional provisions or enabling legislation
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller14
New Fund Balance ClassificationsCommitted Fund Balance
Amounts whose use is constrained by limitation that the government imposes upon itself– Constraint on use imposed by the
government’s highest level of decision making authority
– Same type of action required to remove or change the specified use
– Action to constrain resources should occur prior to end of fiscal year
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller15
New Fund Balance ClassificationsAssigned Fund Balance
Amounts intended to be used for specific purposes
Intent is expressed by– The governing body itself, or– An official delegated by the governing body
Staff recommendation = Delegate this authority to the City Manager per M&C G-17398
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller16
New Fund Balance ClassificationsUnassigned Fund Balance
Available for any purpose
General Fund should be the only fund that reports a positive unassigned fund balance
Deficit balance possible in any governmental fund
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller17
Encumbrances
Encumbrances should not be displayed as restricted, committed, or assigned categories.
Amounts are classified as restricted, committed, or assigned based on the source and strength of the constraints placed on them—encumbering those amount does not further affect them.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller18
Fund Balances: New Fund Balance:Reserved for Encumbrances 6,168$ Nonspendable:Reserved for Inventories 3,448 Inventories 3,448$ Reserved for Advances 5,966 Advances to Other Funds 5,966 Reserved for Prepaids, Deposits, and Other 532 Prepaids, Deposits and Other 532 Unreserved, Designated for Authorized Expenditures: Total Nonspendable 9,946
Risk Management 11,844$ Workers Compensation 3,993 Restricted:Unemployment Insurance 256 Culture & Tourism 15,692 Group Health Insurance 24,975 Revenue from DFW Assit 187 Culture & Tourism 15,692 Emerg Mgmt Rev-Tarra 25 353 Other Designations 600 Revenue from Guinn School 141
Total Unreserved, Designated 57,360 Total Restricted 16,045 General Fund
Unreserved: Committed:General Fund 58,794 Risk Management 11,844 Total Fund Balances 132,268$ Workers Compensation 3,993
Unemployment Insurance 256 Group Health Insurance 24,975 Encumbrance Approved
by Council before 9/30 6,110 Designations 600
Total Committed 47,778
Assigned:Encumbrances Approved
by Council after 9/30 - Encumbrance Approved
by City Manager 58 Total Assigned 58
Difference due to unspentrestricted revenues at year-end 353 Unassigned 58,441
Total Fund Balance 132,268$
FUND BALANCE JUNE 30, 2011 (CAFR FORMAT) FUND BALANCE AS RESTATED WITH GASB-54
CITY OF FORT WORTH, TEXASFUND BALANCEGENERAL FUND
JUNE 30, 2011(in 000's)
County of Riverside ■ Office of the Auditor-Controller19
Footnote Disclosure
• For Committed Fund Balance– The government’s highest level of
decision making authority;– Formal action that is required to be
taken.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller20
Footnote Disclosure
For Assigned Fund Balance:– The body or official authorized to assign
amounts to a specific purpose.– Staff recommendation = M&C G-17398 to
authorize City Manager or his/her designee to make assignment
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller21
Footnote Disclosure
Government policy regarding order of spending Staff recommendation = M&C G-17398 to
amend Financial Management Policy Statements
─ Restricted and unrestricted fund balance─ Committed, assigned, and unassigned
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller22
-----------------------------------Governmental Fund Type
Definitions-----------------------------------
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller23
Fund Type DefinitionsGeneral Fund
Current Definition: The general fund is used to account for all financial resources except those required to be accounted for in another fund.
GASB 54 Definition: The general fund is used to account for and report all financial resources not accounted for and reported in another fund.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller24
Financial Management ServicesGASB 54 Fund Balance Requirements
• General Fund for CAFR• Staff Recommendation = M&C G-17398 to
commit funds to Risk Financing– Risk Management Fund– Workers Compensation Insurance Funds– Group Health Insurance Fund– Unemployment Compensation Insurance Fund
Fund Type DefinitionsGeneral Fund
County of Riverside ■ Office of the Auditor-Controller25
Fund Type DefinitionsSpecial Revenue Fund
Current Definition: Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes.
GASB 54 Definition: Special Revenue Funds are used to account for and report proceed of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller26
Fund Type DefinitionsSpecial Revenue Fund
Proceeds of specific revenue source that are restricted or committed should be recognized as revenue in the special revenue fund and not in the fund initially receiving them.
If the government no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue source, then the resources should be reported in the general fund.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller27
Fund Type DefinitionsCapital Project Funds
Current Definition: Capital Project Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities.
GASB 54 Definition: Capital Project Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller28
Fund Type DefinitionsDebt Service Funds
Current Definition: Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt and interest.
GASB 54 Definition: Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.
Financial Management ServicesGASB 54 Fund Balance Requirements
County of Riverside ■ Office of the Auditor-Controller29
Next Steps
• Staff recommends approval of M&C G-17398– Establish priority of spending– Commit to risk financing – Appoint City Manager to assign fund balance
• To be compliant with normal purchasing rules
County of Riverside ■ Office of the Auditor-Controller30
Next Steps
• Implement GASB 54 = FY2011 CAFR• Continue to monitor and implement future
GASBs and other accounting and finance related requirements