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MEMORANDUM DATE: November 10, 2011 TO: Mayor and City Council FROM: Jay Hartman, hnterim City Manager Roger Larson, Finance Director ITEM: GASB 454 The Governmental Accounting Standards Board (GASB) requires Cities implement new accounting standards by 12/31/11. The implementation of GASB 454 will provide improved documentation, financial reporting and a clearer way of presenting year-end financial reports. The new accounting standard does not change how the City of St. Anthony conducts business. All of the changes from a presentation standpoint are presented in the City's Comprehensive Annual Financial Report (CAFR). GASB #54 requires the following: 1) Adoption of formal "fund Balance PoIicy" to: A. Document the City's minimum fund balance policy. 13. Authorize the Finance Director/City Manager to assign fund balances that reflects the City's intended use. C. Define how restricted and unrestricted resources are available for use. 2) As defined in the Fund Balance Policy, requires that fund balances be reported in five categories (previously there were three): A. Non -spendable fund balance B. Restricted fund balance C. Unrestricted fund balance: a. Committed b. Assigned c. Unassigned fund balance 3) A resolution be passed that restricts or commits specific revenue sources in Special Revenue funds for expenditures committed for a specific purpose. A. St. Anthony has 5 Special Revenue Funds that are defined in the attached resolution. To comply with tine new standards, Staff is recommending implementation and approval of tine new GASB 454 accounting standards requiring two forms of action: 1) Con neil approves (by motion) the attached "Fund Balance Policy" that is in compliance with the requirements of the Governmental Accounting Standards Board. 2) Council approves Resolution 411-074 which commits specific revenue sources in Special Revenue Funds for the City of St. Anthony.