gasb 54 fund balance reporting and governmental fund types

1. GASB 54 Fund Balance Reporting and Governmental Fund Types

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3. Review of GASB 54 Fund Balance Categories

4. Nonspendable In nonspendable form Inventory Prepaid items Some Long-term receivables Required to be maintained intact Permanent fund principal Principal of a revolving loan fund Nonspendable fund balance 4

5. Nonspendable fund balance related to long term loans and advances receivable is applicable in the GAAP General Fund only Fund balance related to long term loans and advances receivable in other governmental funds should be reported as restricted, committed or assigned fund balance as applicable Nonspendable fund balance 5

6. Restricted fund balance results when constraints placed on use of the resources are either: Externally imposed by creditors, grantors, contributors, or laws or regulations of other governments Imposed by law through constitutional provisions or enabling legislation Restricted fund balance 6

7. Authorizes the state to assess, levy, charge or otherwise mandate payment of resources from external resource providers AND ALSO Includes a legally enforceable requirement that those resources be used only for specific purposes stipulated by the legislation Enabling Legislation 7

8. The definition has not changed from the GASB 34 definition GASB 46 clarified that legal enforceability of the constraint on spending must be considered More on Enabling Legislation 8

9. Committed fund balance results when constraints placed on use of the resources are: Imposed by formal action of the state�s highest level of decision- making authority Imposed separate from the legislation authorizing the revenue raising Committed fund balance 9

10. Assigned fund balance is the residual category in all governmental funds except the general fund. The resources are neither restricted nor committed Assigned fund balance 10

11. Unassigned fund balance is the residual category in the general fund Used to report negative fund balance in other governmental funds Unassigned fund balance 11

12. Nonspendable fund balance results from the use of specific t-codes for specific accounts Two digit codes are used to identify GASB 54 fund balance categories other than nonspendable GASB 54 in SFMA 12

13. Assumes that each fund contains one primary type of revenue source Additional categories within restricted fund balance are to help us address questions about fund balance GASB 54 in SFMA 13

14. Restricted by federal laws, federal regulations, federal grant agreements, etc. We would expect to see R1 on funds that have an appropriated fund beginning with �6� Appropriate for federal matching funds R1 - Federal 14

15. Restricted by Oregon Constitution We would expect to see this code on D23 funds with an appropriated fund beginning with �4� since Lottery money is restricted in the constitution Must distinguish proceeds of Lottery ticket or game sales from proceeds of bonds backed by Lottery dollars R2 � Constitution 15

16. Enabling legislation authorizes the government to assess, levy, charge or otherwise mandate payment of resources from external resource providers and includes a legally enforceable requirement that those resources be used only for specific purposes stipulated in the legislation R3 � Enabling Legislation 16

17. If your agency has a DOJ opinion, or there are other underlying facts and circumstances that imply an external party could legally compel your agency to use specific resources only for the purposes specified in the law, you should classify the fund balance related to this resource as restricted by enabling legislation R3 - Enabling Legislation 17

18. Restricted by the terms of a COP agreement or bond indenture to be spent on capital projects Restricted by debt covenants for payment of debt service R4 � Debt Covenants 18

19. Restricted by conditions imposed by the donor of the resource Specific resources restricted by conditions imposed by other non-state, nonfederal entities R5 � Donors or external parties 19

20. In addition to D23 funds whose resources fit the definition, use this category if restricted resources in a D23 fund are swept to the general fund Resources are no longer considered restricted; they have been �tainted� C1 � Committed fund balance 20

21. A1 � Assigned fund balance U1 � Unassigned fund balance Applicable in the General Fund only or for negative fund balance in other governmental funds Negative fund balance must be determined at the statewide level and will be reclassified by SARS for financial reporting Other GASB 54 codes 21

22. For D23 funds with various categories of revenues within the same fund, a yearend reclassification will be needed Use a % of revenues approach or Use a spending order approach or Segregate the different revenues into separate D23 funds Multiple sources of revenue 22

23. Send request to SARS Provide revised G54 description if necessary Reclassify the existing balance in fund balance GL to the new fund balance GL For example R3 changed to C1 � reclassify GL 3043 to GL 3051 Changes to fund balance category 23

24. Each agency is responsible to keep supporting documentation for the GASB 54 category chosen for each fund In the case of funds that SARS had reclassified to C1 because of funds swept to the general fund � the e-mail from SARS would be appropriate documentation Documentation 24

25. Appropriated fund 8800 - Unassigned fund balance Money is being added to general spending pool (no intended purpose) All other appropriated funds beginning with �8� � assigned fund balance These funds account for spending of GF money (purpose has been determined) GAAP General Fund 0001 25

26. New form on SFMS website located at: http://www.oregon.gov/DAS/SCD/SFMS/forms.shtml Please use the new form For governmental funds � provide the GASB 54 code and reference information in the applicable fields Requests for new D23 funds 26

27. Specific requirements for certain GASB 54 codes: R2 � G54 description should cite constitutional reference (article, section, subsection) R3 � attach copy of legislation that both authorizes the state to raise the revenue and restricts its use to a specific purpose Requests for new D23 funds 27

28. Specific requirements for certain GASB 54 codes: R3 � G54 description should reference the enabling legislation (OR law year, chapter, section, subsection) or ORS reference R4 � G54 description should reference the type of debt, year, series Requests for new D23 funds 28

29. Specific requirements for certain GASB 54 codes: C1 � attach a copy of the legislation that restricts the use of an existing resource C1 � G54 description should reference the legislation that restricts the use of an existing resource, or cite an ORS reference Requests for new D23 funds 29

30. For all requests, as always � attach a copy of the legal authority for the fund Requests for new D23 funds 30

31. GL accounts for Nonspendable FB 3031 � Inventory 3032 � Prepaid Items 3033 � Permanent Fund Principal 3034 � Long-term Loans Receivable 3035 � Advance to Other Fund 3036 � Revolving Accounts 3037 � Other Noncurrent Receivables New GL accounts in SFMA 31

32. GL accounts for Restricted FB 3041 � (R1) Federal 3042 � (R2) Oregon Constitution 3043 � (R3) Enabling Legislation 3044 � (R4) Debt Covenants 3045 � (R5) Donor/Other External Party New GL accounts in SFMA 32

33. Other Fund Balance GL accounts 3051 � (C1) Committed Fund Balance 3052 � (A1) Assigned Fund Balance 3053 � (U1) Unassigned Fund Balance New GL accounts in SFMA 33

34. For GL 3020- Unreserved, Undesignated FB and 3007-Reserved for Debt Service: New fund balance classification will be based on the fund balance category designated for each D23 fund and shown in the GASB 54 field (the GASB 54 code) Moving beginning fund balance 34

35. So far: Agencies have provided GASB 54 codes for each of their governmental funds GASB 54 codes have been input on the D23 fund profiles in SFMA GASB 54 codes have been reviewed by agencies Moving beginning fund balance 35

36. So far: Each agency has been sent two reports Existing fund balance GL accounts and amounts Fund balance GL accounts and amounts that will be reported as beginning fund balance for FY11 based on the GASB 54 codes input in SFMA Moving beginning fund balance 36

37. Review the reports and confirm that they are correct Each agency has the choice to use an interface batch created by DAS or complete the reclassifications independently Let SARS know your choice (by e-mail and by 4/29/11) Include the number of lines on each of your reports as a double check that we are both looking at the same reports Moving beginning fund balance 37

38. Release of the interface batch indicates agency approval Reclassification should be completed no later than May 31, 2011 Moving beginning fund balance 38

39. To record Nonspendable FB: TC 502 - Inventory TC 510 - Prepaid items TC 564 - Revolving accounts (petty cash) TC 452 - Other noncurrent receivables TC 486 - Advances to other funds (GF only) TC 698/TC 699 � Prepaid legal fees New T-codes in SFMA 39

40. To adjust nonspendable balances: TC 143 � To record collection on noncurrent receivables TC 472 - to adjust Advance to Other Fund/Agency for repayment (GF only) Loans receivable TC 458 � to establish loans receivable TC 145 � to record repayments received New T-codes in SFMA 40

41. Except for advances to other funds being recorded in the General Fund � all fund types use the same t-codes Advances to Other Funds TC 446 � Establish/Adjust TC 447 � Record repayment Advances from Other Funds TC 448 � Establish/Adjust TC 449 � Record repayment T-codes for advances 41

42. Except for a loan receivable being recorded in the General Fund, all fund types use the same t-codes TC 458 � Establish/Adjust TC 145 � Record repayment TC 455 � Write off uncollectible A reclassification entry will be needed to record nonspendable fund balance related to loans receivable in the GF T-codes for Loans Receivable 42

43. New t-codes to reclassify fund balance TC 453/TC 454 � to reclassify GASB 54 Fund Balance from one category to another Reserved fund balance t-codes will be inactivated Various other t-codes modified Other T-code changes 43

44. For reserved fund balances: Each agency must reclassify the balances to the applicable GASB 54 category Reserved for Inventory should be reclassified to Nonspendable FB-Inventory, Reserved for Prepaid Items should be reclassified to Nonspendable FB-Prepaids, etc. Moving reserved fund balance 44

45. Nonspendable fund balance is applicable in the General Fund only TC 477R - remove Advance To and related Reserved fund balance account TC 446 � reestablish Advance To Other Funds without Reserved fund balance account Fund balance will be reported in the GASB 54 category designated on the D23 fund Reserved for Advances to OF 45

46. Eliminate �Amount to be Provided� TC 482R/483R � remove Advance from Other Funds and Amount to be Provided TC 448 � reestablish Advance from Other Funds without Amount to be Provided Could also use TC 484/485 to remove and TC 449R to reestablish Advances from Other Funds 46

47. Nonspendable fund balance is applicable in the General Fund only TC 471R � remove loan receivable and reserved fund balance account TC 471 � remove allowance for uncollectible and reserved fund balance TC 458 - reestablish loan receivable TC 458R � reestablish allowance account Fund balance will go to fund balance category designated on the D23 fund Reserved for Loans Receivable 47

48. Mortgages, Notes, Contracts, Taxes TC 452 replaces TC 460 for governmental funds TC 460R/452 to remove/reestablish noncurrent receivable TC 460/452R to remove/reestablish allowance for uncollectibles Reserved for Other NC Receivables 48

49. TC 502 replaces TC 503 for governmental funds Use TC 503R to remove inventory and related reserved fund balance Use TC 502 to reestablish inventory with nonspendable fund balance If proceeds from sales of inventory are restricted, committed or assigned to a specific purpose- use TC 500 Reserved for Inventory 49

50. TC 510 replaces TC 515 for governmental funds Use TC 515R to remove Prepaid Items and related reserved fund balance account Use TC 510 to reestablish Prepaid Items and related nonspendable account Reserved for Prepaid Items 50

51. TC 564 replaces TC 565 for governmental funds Use TC 565R to remove Petty Cash and related reserved fund balance Use TC 564 to reestablish Petty Cash with nonspendable fund balance Reserved for Petty Cash 51

52. Use TC�s 453/454 to reclassify GL 3010, Reserved for Permanent Fund Principal, to GL 3033, Nonspendable Fund Balance-Permanent Fund Principal When additional permanent fund principal is received, use TC�s 453 and 454 to reclassify out of fund balance designated on the D23 fund to GL 3033, Nonspendable Fund Balance- Permanent Fund Principal Reserved for Perm Fund Principal 52

53. SARS will be monitoring these accounts to make sure all balances are reclassified To be completed by June 17, 2011 (close of May in SFMA) Reserved fund balance t-codes will then be inactivated Reserved fund balances 53

54. Used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes GASB 54 clarified that a special revenue fund may be used only if a �substantial portion� of the fund inflows are restricted or committed revenues Special Revenue funds 54

55. SARS provided a guide for determining appropriate use of special revenue funds Funds not meeting the criteria to be reported as special revenue funds should be redirected to the General Fund (GAAP 0054), a debt service, or a capital projects fund Special Revenue fund test 55

56. Restricted and Committed revenues � Inflows must = 30% Revenues ? taxes, fees, charges for services, interest income, etc. Inflows ? revenues + transfers in Do not include large one-time inflows such as the proceeds of a debt issue Special Revenue fund test 56

57. SARS has taken an initial look at special revenue funds SARS will contact and work with agencies where issues were noted If you�ve already done work on the special revenue fund test and have identified funds that need to move, let us know (if you haven�t already) Special Revenue fund test 57

58. Redirecting D23 funds from special revenue funds to the general fund will result in equity changes in both SARS will request the initial changes and keep a list to help with financial reporting Future requests to redirect individual funds will need to go through SARS New D23 funds may be directed to GAAP fund 0054 (GASB 54 GF) Directing funds to GAAP 0054 58

59. Moving beginning fund balances Reviewing special revenue funds Updating our financial reporting tools Updating our financial reports Updating affected CAFR footnotes and statistical schedules Drafting new CAFR footnotes required by GASB 54 What we are still working on 59

60. Updating affected OAM chapters Updating the Agency Guide to Year End Closing Discovering things we�ve overlooked or haven�t fully considered (let�s hope not!) What we are still working on 60