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SH"L+E <br /> w <br /> REQUEST FOR COUNCIL ACTION <br /> Date: 11/28/11 <br /> Item No.: 7 • f <br /> Department Approval City Manager Approval <br /> Item Description: Categorizing City Fund Balances in Accordance with New Governmental <br /> Standards <br /> BACKGROUND <br /> The presentation of municipal financial statements is guided by a number of oversight agencies including <br /> 3 the Government Accounting Standards Board(GASB), a national organization that establishes generally <br /> 4 accepted accounting and reporting standards for governmental entities. In February 2009,GASB Statement <br /> 5 #54: Fund Balance Reporting and Governmental Fund Type Definitions was issued. <br /> 6 <br /> 7 This Statement prescribed a new financial reporting requirement designed to enhance and clarify fund <br /> 8 balance classifications and to promote greater consistency in governmental financial reporting. The <br /> 9 Statement establishes fund balance classifications that comprise a hierarchy based on the extent to which a <br /> '1 0 government is bound to constraints imposed upon the use of its financial resources. This Statement only <br /> 1,1 applies to the City's governmental funds; funds that are established for to account for the activities of <br /> 1 d"? general programs and services. It does not apply to the City's water, sewer, or other 'enterprise'- type <br /> '1 3 funds. <br /> '14 <br /> '1 5 Under GASB Statement #54, a government's highest level of decision-making authority is required to <br /> '1 6 assign these classifications—in our case, the City Council. The information presented below provides a <br /> 17 brief overview of the classifications along with City Staff s recommendation on how to classify existing <br /> '1 8 fund balances. <br /> '1 9 <br /> 120 Fund Balance Classifications <br /> 1�11 GASB Statement #54 provides for 5 distinct classifications of fund balance. It should be noted that <br /> GASB's focus is primarily towards practitioners and the technical reader (as is probably evident by the <br /> `23 terms and definitions). Nonetheless,the Council is asked to review the classifications in advance of making <br /> 24 a formal determination of where City funds ought to be categorized. <br /> `25 <br /> 26 City Staff will be available at the Council meeting to provide additional interpretation and guidance. The <br /> 27 classifications are summarized in the table below. <br /> 8 <br /> Page 1 of 7 <br />