GASB 54 Implementation Steps
Posted 1-26-2011 | By David Mol | Download Article
Governmental Accounting Standards Board (GASB) Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions is effective for calendar years ending December 31, 2011. Implementation may require action by your governing body, affect your 2011 budget, require tracking the use of funds, and/or require the establishment or modification of policies. We recommend addressing the following implementation issues in early 2011:
Fund Balance Reporting:
Nonspendable Fund Balance and Restricted Fund Balance - Both are outside the entity's control. The only action needed is to identify and track these balances during 2011.
Committed Fund Balance - The governing body has the power to establish fund balance commitments but action must be taken by year end (although the exact dollar amount may be determined subsequently). Commitments should be established and/or identified and tracked during 2011.
Assigned Fund Balance- The governing body has the power to assign fund balance or take action to delegate the authority to assign to an individual or group. Assignments should be established and/or identified and tracked during 2011.
Unassigned Fund Balance - No action is required for unassigned fund balance.
Fund Balance Policy - Governmental units should adopt a fund balance policy or modify their existing policy to address the following:
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Flow assumptions (the order of use of the various components of fund balance)
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Minimum fund balance (addressing cash flow, routine emergencies, etc.)
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Stabilization arrangement (establishing conditions for spending, etc.)
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Delegation of authority to assign (if desired).
Fund Type Definitions:
Capital Project Funds - Entities are now allowed to account for any financial resources that are restricted, committed or assigned for capital outlays (other than those financed by proprietary or fiduciary funds) in capital project funds. Activities related to capital outlay previously reported as a special revenue fund, because the expenditures were not for major capital facilities, should be reclassified to a capital project fund during 2011.
Special Revenue Funds - A specific revenue source is generally required that is restricted or committed to expenditures for the specific purpose (other than debt service or capital projects) of the special revenue fund. Restrictions are outside the control of the entity; however the governing body has the power to establish commitments. Commitments must be established before year end. The entity should document the restriction and/or commitment for each special revenue fund. Special revenue funds that do not meet GASB 54 requirements should be reclassified, generally to the General Fund. The entity may want to amend the General Fund budget for any reclassified activity.
If you would like to further discuss GASB 54, please contact David Mol, CPA, at dmol@hlbtr.com, or Peggy Moeller, CPA, at pmoeller@hlbtr.com.