Other Auditor Reports 12/31/2010

Home Search

New Accounting and Reporting Standards Fund Balance Reporting Changes In March 2009, Governmental Accounting Standards Board issued GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The requirements of this Statement are effective for the City's fiscal year ending December 31, 2011. Governments that wish to implement earlier than that date are encouraged to do so. Statement 54 distinguishes between fund balance amounts that are considered non -spendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative ability to be spent. Beginning with the most non -spendable classification, fund balances will be reported in the following classifications: • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation. • Committed—includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making authority • Assigned—amounts a government intends to use for a particular purpose. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. • Unassigned—amounts that are not constrained at all will be reported in the general fund or to report deficit balances in other governmental funds. The statement interprets certain terms within the definition of special revenue funds. The statement also specifies how economic stabilization or "rainy -day" amounts should be reported. For financial reporting purposes, stabilization should be regarded as a "restricted" or "committed" classification only if the government details the circumstances or conditions that signal the need for stabilization in sufficient detail. Otherwise, these amounts should be reported as "unassigned" in the general fund. The Financial Reporting Entity In November 2010, the GASB issued Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34. Statement No. 61 is effective for financial reporting in fiscal year 2013 and modifies previous requirements for the assessment of potential component units (for example the City's Economic Development Authority) in determining what should be included in the City's financial statements. The Statement also modifies the display and disclosure requirements for component units. As a result, the method for including component units in the City's financial statements will need to be re-evaluated and potentially changed in fiscal year 2013. In preparation for evaluating the inclusion of component units under the new guidance in GASB Statement No. 61, the City should revisit the formative documents of its component units including charters, resolutions, bylaws, articles of incorporation, etc. BE