Reporting Requirements for Annual Financial Reports of State Agencies and Universities Show General Accounting IntroductionGASB 54 significantly changed the focus of fund balance reporting in two major areas — fund balance classifications and fund type definitions. For more information on the fund type definitions, see Governmental Funds. Fund balance is reported from the perspective of the underlying resources within fund balance. GASB 54 components of fund balance identify constraints on how resources can be spent and the sources of those constraints. Agencies should note that there is not a one-to-one crosswalk from the old fund balance classifications to the GASB 54 fund balance classifications. GASB 54 does not affect the government-wide or accrual-based statement presentations and it does not change the amount of total fund balance on any fund statements. Governmental fund balance classification is reported in Note 32 — Fund Balances. For the recommended format, see Note 32 Sample. Fund Balance ClassificationsThe fund balance classifications discussed below apply to all governmental funds — general funds, special revenue funds, debt service funds, capital projects funds and permanent funds.
Classifying Fund Balance Amounts
The enabling legislation criteria are not met if any one of the following conditions is present. In these instances, classify the fund balance as committed rather than restricted.
There are currently no fund balances for agencies that meet the “restricted by enabling legislation” requirements.
Fund Balance Allocation ExamplesThe following examples illustrate the classification of fund balance in governmental funds. If you have any questions or need further clarification of fund balance requirements, contact your financial reporting analyst. Example 1A GR-Dedicated fund (FT01) has a deficit income summary (current year expenditures exceeded current year revenues), resulting in a negative unassigned fund balance. Since the GR-Dedicated fund is classified as fund type FT01, USAS automatically closes income summary to the unassigned GL 2325. Fiscal year-end fund balances are:
Because a positive assigned fund balance cannot be reported with a negative unassigned fund balance, and a negative unassigned fund balance can only be presented if the total fund balance is negative — record an adjustment in USAS to allocate the unassigned fund balance of $(75.00) to the assigned fund balance. Once the allocation transaction processes, fiscal year-end fund balances are:
Example 2Example 2 uses the same scenario as Example 1, except the assigned fund balance is insufficient to absorb the entire negative unassigned fund balance. Fiscal year-end fund balances are:
To correct these fund balances:
Once all USAS allocation transactions process, fiscal year-end fund balances are:
Example 3In the scenario below, rather than a positive (surplus) total fund balance as in Example 1, the income summary for the current fiscal year creates a negative (deficit) total fund balance:
To correct these fund balances, process a USAS entry to eliminate the negative unassigned fund balance by allocating resources from the other fund balance classifications. Because the total fund balance is negative, there will still be a negative unassigned balance. Once all allocation transactions process, fiscal year-end fund balances are:
Example 4If an agency has a fund that does not close to the unassigned fund balance, the fund balance allocation process is different. For example, the income summary for special revenue funds (FT02) automatically closes to restricted fund balance GL 2310. If the total fund balance is positive, a surplus or deficit balance in the unassigned fund balance is not allowed. The fund balance is reported as a restricted fund balance. Example 5However, if the total fund balance is negative, allocation entries are required to reclassify the fund balance from restricted to unassigned — since the restricted fund balance cannot report a negative amount. Fiscal year-end fund balances are:
Process a USAS entry to allocate the negative restricted fund balance to the unassigned fund balance. Once all allocation transactions process, fiscal year-end fund balances are:
USAS General Ledger AccountsThe following GL accounts are used to record fund balances in USAS.
EncumbrancesA fund balance constraint specific to encumbrances similar to “reserved for encumbrances” is no longer reported. This does not impact the process of recording encumbrances in USAS for budgetary purposes. For more information, see Encumbrance Report and Lapsing of Appropriations (APS 018) (FPP A.019). Include encumbered funds in the restricted, committed or assigned category based on the constraints placed on them. Amounts encumbered for a specific purpose may be reported as assigned fund balance only if the resources:
The Comptroller’s office does not require that encumbrances be disclosed in agencies’ notes to the financial statements as this information is not used in the compilation of the state of Texas ACFR. However, agencies may choose to disclose encumbrances in their AFR notes to the financial statements. Imprest AccountsImprest accounts (previously categorized as “Fund Balance Reserved for Imprest Accounts”) are not reported as a separate fund balance category and are not classified in a different category from the remainder of the fund balance (that is, restricted, committed or assigned). For fund balance allocation templates, see the Working Papers. Government-wide Statement of Net Position Basis Conversion GL’sThe following basis conversion GLs are used to record the components of net position for governmental funds. Net Position, Net Investment in Capital Assets (GL 3505) – The difference between assets, deferred outflows, deferred inflows and liabilities that consists of capital assets (including restricted capital assets) less:
The portion of debt or deferred inflows of resources attributable to the unspent amount of related debt proceeds or deferred inflows of resources at fiscal year-end is included in the same net position component (restricted or unrestricted) as the unspent amount — not in the calculation of net position, net investment in capital assets. Net investment in capital assets for governmental activities and business-type activities is difficult to trace through notes and schedules on financial reports. For example, part of accounts payable may be capital accounts payable, but are not separately displayed in financial statements. For this reason, the agency must submit the Net Investment in Capital Assets working paper to show the calculation of the net investment in capital assets. Use the working paper’s PG# column to reference the source of the line item from the agency’s annual financial report. Restricted Net Position – The difference between assets, deferred outflows, deferred inflows and liabilities that consists of assets with constraints placed on their use that are either:
Record restricted net position to the following GLs:
Record nonexpendable restricted net position to the following GLs:
Record expendable restricted net position to the following GLs:
Unrestricted Net Position – The difference between the assets, deferred outflows, deferred inflows and liabilities not reported as net position, net investment in capital assets or restricted net position. Record unrestricted net position to the following GLs:
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