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• <br /> EN HILLS <br /> MEMORANDUM <br /> DATE: December 13, 2011 <br /> TO: Financial Planning and Analysis Committee <br /> FROM: Sue Iverson, Director of Finance and Administrative Services <br /> Kyle Howard, Finance Analyst <br /> SUBJECT: Meeting agenda <br /> • Fund Balance Policy and the New GASB 54 Statement <br /> The Government Accounting Standards Board (GASB) issued Statement 54 "Fund Balance <br /> Reporting and Governmental Fund Type Definitions" in February 2009 and is effective with the <br /> 2011 reporting year. These new requirements will require us to change our presentation of fund <br /> balance and modify our fund balance policy. <br /> DISCUSSION <br /> New Fund Balance Classifications <br /> GASB 54 separates fund balance into five new categories. Under the old standards, there were <br /> three categories: Reserved, Designated, and Undesignated. The new categories are more <br /> descriptive, and focus o how the City plans to use its resources. A brief description of each of <br /> the new categories is listed below along with examples of each. <br /> Nonspendable fund balance — The nonspendable fund balance classification includes amounts <br /> that cannot be spent because they are either (a) not in spendable form, or (b) legally or <br /> contractually required to be maintained intact. "Not in spendable form" means items that are not <br /> expected to be converted to cash. Examples of items that are not in spendable form include <br /> inventories, prepaid items, long-term amounts of loans and notes receivable, and land held for <br /> resale. <br /> Restricted fund balance—Fund balance should be reported as restricted when constraints placed <br /> • on the use of resources are either (a) externally imposed by creditors, grantors, contributors, or <br /> laws or regulations of other governments, or (b) imposed by law through constitutional <br />