![]() ![]() Permanent funds should be used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs – that is, for the benefit of the government or its citizenry. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds. Debt service funds should be used to report resources if legally mandated. Capital project funds exclude those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments.ĭebt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Special revenue funds should not be used to account for resources held in trust for individuals, private organizations or other governments.Ĭapital project funds are used to account for and report financial resources that are restricted, committed or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The restricted or committed proceeds of specific revenue should be expected to continue to comprise a substantial portion of the inflows reported in the fund. ![]() The term “proceeds of specific revenue sources” establishes that one or more specific restricted or committed revenue should be the foundation for a special revenue fund. Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. It is the principal operating fund of the county for governmental purposes. The general fund should be used to account for and report all financial resources not accounted for and reported in another fund. However, as county management may consider creating new governmental funds in the future, management should be aware of each of the governmental fund definitions. Therefore, counties should have few, if any, governmental funds that currently do not meet the standard to be separate funds. As counties in Tennessee prepared annual budgets for the 2010-11 Fiscal Year, CTAS analyzed every county special revenue fund statewide and worked closely with the counties and State Comptroller to identify and close over 100 governmental funds, across the State, which no longer met the definition of a separate governmental fund. County management should review these definitions and ensure that all current and, especially, any proposed new governmental funds meet the definition to be a separate fund. The Statement redefines the definitions of the five types of governmental funds. Several factors will have to be considered about this new standard as the annual budget is prepared. While the Statement’s purpose is clear, only time will tell if the expected end result is realized once the theory is applied to practice. Some questioned whether the focus on availability for appropriation continued to best serve the needs of financial statement users.The previous components were often applied inconsistently in practice.The previous terminology (i.e., reserved, unreserved, designated) was not self-explanatory and frequently was misunderstood by financial statement users.Three considerations led to the replacement of the previous components of governmental fund balance: The purpose of the Statement is to improve financial reporting by providing fund balance categories and classifications that will be more easily understood. ![]() This latest GASB standard substantially alters the focus and terminology used for fund balance reporting. In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement 54, Fund Balance and Governmental Fund Reporting. ![]()
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