Balancing Governmental Budgets Under GASB 54

Use the following fund types in USAS to record the basis conversion transaction amounts needed to convert the FFS to the GWFS. If you are acting as administrator for someone else’s pension/OPEB plans, the plans still must meet the criteria above to be reported in a trust fund. This one is used to report on trust arrangements where other parties are the beneficiaries. For example, a state government receives unclaimed property and holds it in a private-purpose trust fund until the rightful owners eventually claim their property. Because the accounting is different, there’s also a different organization that sets the accounting standards for it, which is the Governmental Accounting Standards Board. This is the sister organization to the Financial Accounting Standards Board, which sets the accounting standards for most other types of organizations.

1. Types of funds or activities within this category can be a general fund – sometimes referred to as a primary operating fund, special revenue, debt service, and capital project.
2. They may use the calculation below to determine whether an activity would qualify for reporting as a special revenue fund.
3. Even if the fee is meant to cover the cost of the service, the county auditor function as a whole is primarily supported with tax dollars from the general fund.
4. It’s not supposed to earn a profit; instead, it’s supposed to provide services in a cost-effective manner.

For example, building permit fees may be accounted for in the general fund or a special revenue fund in certain circumstances, such as when they are partially supported by taxes. However, if there is a pricing policy to recover the cost of issuing those individual building permits, they should be reported in an enterprise fund. Therefore, it can be seen that the governmental accounting system should be organized in a manner that ensures that all transactions are duly recorded in the system. In this regard, a fund is realized to be defined as a fiscal and accounting entity. The main premise here is to make sure that all cash or non-cash-related transactions are mentioned on the financial statement in order to reduce the chance of any embezzlement or fraudulent activities within the company.

The Focus of Governmental Financial Reporting

Each fund is a separate fiscal entity and is established to conduct specific activities and attain objectives in accordance with statutes, laws, regulations, and restrictions or for specific purposes. The reporting entity’s fund financial statements should present the primary government’s (including its blended component units, which are, in substance, part of the primary government) major funds individually and nonmajor funds in the aggregate. Funds and component units that are fiduciary in nature should be reported only in the statements of fiduciary net position and changes in fiduciary net position. The term proceeds of specific revenue sources establishes that one or more specific restricted or committed revenues should be foundation for a special revenue fund.

Account Structure

Code Debt Service Funds – should be used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Also, if the government is authorized, or required to establish and maintain a special assessment bond reserve, guaranty, or sinking fund, GASB Statement 6 requires using a debt service fund for this purpose. The fiduciary fund category consists of funds where the government is serving as a trustee or custodian of resources for citizens, organizations, or other governmental entities. The government is restricted from using the funds, but holds them for a specific group, entity or activity. Common examples of fiduciary funds are pensions or other types of employee benefit funds.

For example, consider a county auditor’s office that charges fees to provide a payroll service to various taxing districts. Even if the fee is meant to cover the cost of the service, the county auditor function as a whole is primarily supported with tax dollars from the general fund. It would be allowable in this case to leave the activity all within general fund. The Statement requires all revenue to be recognized in the special revenue fund.

Governmental Accounting: Part 1 (#

The Debt Service Fund is used to account for and report financial resources that are spent in order to settle different debts. Therefore, this particular type of fund is used in order to account for all debt-related payments and issues within the government. Capital Projects Fund accounts for financial resources that are mainly governmental accounting fund types related to the construction of major capital-related projects. Therefore, it mainly accounts for infrastructure-related costs that are borne by the government. Therefore, they mainly include costs pertaining to significant capital expenditures that are undertaken, and this fund only holds reserves for this particular cause.

Open Notes to Financial Statements sub menu

Universities are required to report all funds in a single column instead of by individual USAS fund. The key measurement focus in a government fund’s financial statements is on expenditures, which are decreases in the net financial resources of a fund. Most expenditures should be reported when a related liability is incurred. This means that a governmental fund liability and expenditure is accrued in the period in which the fund incurs the liability.