11.02 - GASB 54 - Laserfiche WebLink

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L City of Pequot Lakes - MEMORANDUM To: Pequot Lakes City Council From: Nancy Malecha, Finance Administrator/Deputy City Clerk Date: October 18, 2011 Subject: GASB 54 In 2009, the Governmental Accounting Standards Board (GASB) released Statement 54 —'Fund Balance Reporting and Governmental Fund Type Definitions' which is effective beginning in 2011. Fund balance is the difference between assets and liabilities in governmental funds. This Statement is intended to improve the usefulness of the amounts reported in fund balance by providing more structured classifications. This Statement applies to fund balances reported in the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, and Permanent Funds. This Statement does not apply to Enterprise Funds, Internal Service Funds, and extremely restricted reserves. The following table illustrates the prior fund balance definitions and the new fund balance definitions. PRIOR DEFINITIONS NEW GASB 54 DEFINITIONS Reserved — Indicates the portion of fund balance Non - Spendable - Amounts that cannot be spent which has been legally segregated for specific because they are either not in spendable form (i.e. purposes. prepaids, inventory, long -term receivables) or there is a legal or contractual requirement to be maintained intact. Unreserved, Designated — Indicates the portion of Restricted — Externally enforceable limitations fund balance for which the City has made tentative of use (i.e. limitations imposed by creditors, plans. grantors, statutes, etc... . Unreserved, Undesignated — Indicates the portion Committed — Self - imposed limitations set in place of fund balance which is available for budgeting in prior to the end of the year. These limitations must future periods. be imposed by the highest level of decision making authority at a local government (i.e. city council). Must also have a similar formal action by the same level of decision making authority to remove or modify the commitment. Assigned — Self- imposed limitations of fund balance resulting from intended use. These limitations can be established after year end, up to the date of issuance of the audit report and the authority to determine assigned fund balance can be delegated to someone other than the governing board. Unassigned — Is the residual classification for the general fund. Any negative residual amounts in other governmental funds would be reported as negative unassigned in that particular fund.