07-10-07 FPAC Agenda - Laserfiche WebLink

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4110 long-term forecasting,thereby avoiding the risk of placing too much emphasis upon the level of unreserved fund balance in the general fund at any one time. In establishing a policy governing the level of unreserved fund balance in the general fund,a government should consider a variety of factors,including: • The predictability of it revenues and the volatility of its expenditures(i.e.,higher levels of unreserved fund balance may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile). • The availability of resources in other funds as well as the potential drain upon general fund resources from other funds(i.e.,the availability of resources in other funds may reduce the amount of unreserved fund balance needed in the general fund,just as deficits in other funds may require that a higher level of unreserved fund balance be maintained in the general fund). • Liquidity(i.e.,a disparity between when financial resources actually become available to make payments and the average maturity of related liabilities may require that a higher level of resources be maintained). • Designations(i.e.,governments may wish to maintain higher levels of unreserved fund balance to compensate for any portion of unreserved fund balance already designated for a specific purpose). Naturally,any policy addressing desirable levels of unreserved fund balance in the general fund should be in conformity with all applicable legal and regulatory constraints. In this case in particular,it is essential that differences between GAAP fund balance and budgetary fund balance be fully appreciated by all interested parties. 11111 Approved by the Committee on Accounting,Auditing and Financial Reporting and the Committee on Governmental Budgeting and Management,January 30, 2002 Approved by the Executive Board,February 15,2002.