Policy 807.1 - GASB 54


Inasmuch as GASB 54, Fund Balance Reporting and Governmental Fund Type Definitions, which establishes accounting and financial reporting standards for all governments that report governmental funds requires the District to disclose certain requirements, the District identifies the following as District operating policy.

The fund balance identified as 'committed fund balance' will be determined by the Board of Directors and will require formal board action. An identified committed fund balance should be for a specific purpose pursuant to constraints imposed by the formal action of the Board of Directors. The Board of Directors will take action to 'commit' a fund balance prior to year-end (June 30) of the year the original committed amount is determined. The exact amount of the committed balance may be determined after the year-end; however, in compliance with GASB 54 the intended committed purpose must be identified, prior to year-end (June 30).

In the event that a committed fund balance is identified subsequent to year-end (June 30), the amount will be reflected on the balance sheet as assigned for that year.

The committed amounts cannot be used for any other purpose unless the Board of Education at a public meeting by formal action makes changes or rescind the committed balance.

The Board of Directors authorizes the Business Manager to assign amounts to a specific purpose in compliance with GASB 54. An assigned Fund Balance should be reported for constraints by the District's intent to be used for specific purpose, but are not restricted or committed.

In accordance with the GASB 54 the District identifies that when an expenditure is incurred, it is applied to the highest level of classification of fund balance and then subsequently applied to honor constraints on the specific purposes for which amounts in those fund balances can be spent.

GASB No. 54 Fund Balance Reporting and Governmental Fund Type Definitions

Disclosures requirements:
Governments should disclose the following about their fund balance classifications policies and procedures:

For Committed Fund Balance
1. The government's highest level of decision-making authority.
2. The formal action that is required to be taken to establish (modify and/or rescind) a fund balance commitment.
3. Board committed amounts must be committed prior to fiscal year end. If these are committed after fiscal year end they are reflected as assigned on the balance sheet.

For Assigned Fund Balance
1. The board or official authorized to assign amounts to a specific purpose.
2. The policy established by the governing body which that authorization is given. 

For the classification of fund balances in accordance with paragraph 18 of GASB No. 54
1. Whether the government considers restricted or unrestricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available.
2. Whether committed, assigned, or unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

On a practical point - before June 30, 2011
____ Adopt a policy which identifies the Board of Directors as the decision making authority with regard to committing balances. This policy should reflect how the committed balance is established, modified or rescinded.
____ The Board of Directors should officially authorize the official or body who may assign amounts to a specific purpose.
____ The Department of Education Certified Annual Report will require modification in the fund balance section of the balance sheets. Use the Department of Education Revised Descriptions/Comments information included on the Department of Education's website with regard to the account codes.
____ GASB 54 applies to government funds; however, the DE has made changes to the chart of account structure that will affect other funds. For instance, the Nutrition balance will change to 780. You will need to review all funds for the COA changes.
____ Per the Department of Education the Activity, Management, PPEL, PERL, Capital Projects, and Debt Service funds will all be restricted fund balances. This means the account code will change to 729. (This is the bulk of the fund balance required changes)
____ The General fund individual fund balances should be reviewed individually to determine the best place to code. Most Districts' General fund will have Restricted, and unassigned. Assigned balances should be identified by an authorized person. Review the current accounts in the fund balance and determine the appropriate classification for each account within the fund balance.

Changing the fund balances:
These accounts may be cross walked if you currently have the fund balance account and your software allows cross walking. The history of the old account number will be adjusted to the new number. The advantage of the crosswalk is that the linked accounts should re-link with the new number without having to re-link all the revenue and expense accounts manually. The cross-walking in the Student Activity fund and restricted balances in the general fund for example should help minimize the number or changes in the account coding. (If your software allows crosswalks after year end you can perform this after June 30.)

The software that does not allow cross-walking usually provides a database of accounts that is intended for the upload of the Certified Annual Report. Generally the database identifies the current accounts in the general ledger and then a column for the account numbers used for the upload. The account balances may need to be added and journal entries completed to identify the required fund balance if there is not a separate database to modify before the upload.

Nonspendable Fund Balance - The nonspendable fund balance classification includes amounts that cannot be spent because they are either:
• Not in spendable form.
The 'not in spendable form' includes items that are not expected to be converted to cash. Examples include inventories and prepaid items.
• Legally or contractually required to be maintained intact.

Restricted Fund Balance - Fund balance should be reported as restricted when constraints placed on the use or resources are either: Example: State grant carryovers, Special revenue, PPEL, Debt Service, and Capital Projects fund balances.
• Externally imposed by laws or others.
• Imposed by law through constitutional provisions or enabling legislation.

Committed Fund Balance -Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority should be reported as committed fund balance. Those committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action it used to commit those amounts. Example: Most Districts will not have committed balances.

Assigned Fund Balance - Amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance except in certain arrangements. Example: in the general fund - book fairs, field trip funds carryover.

Unassigned Fund Balance - Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund.

Adopted: 06/27/11
Reviewed: 11/07/16

Legal Reference:

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