Finance Highlights 2011 0603 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: June 3, 2011 TO: Finance Committee FROM: Stephen L. Hollister, City Manager BY: Tracy Vesely, Finance Director Carla Rodriguez, Deputy Finance Director SUBJECT: New Fund Balance Components as Defined in Governmental Accounting Standards Board Statement 54 RECOMMENDATION Staff recommends Finance Committee approving the Fund Balance components as defined in Governmental Accounting Standards Board Statement No. 54 (GASB 54). This new statement requires a formal adoption of the City Council by June 30, 2011, and staff intends to place this item on the June 20, 2011 City Council agenda. SUMMARY The Governmental Accounting Standards Board (GASB) has issued its Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitirns. The requirements of this statement are intended to improve financial reporting by providing fund balance categories that will be more easily understood for the following governmental fund type; (a) General fund: used to account for and report all financial resources not accounted for and reported in another fund, (b) Special Revenue Funds use to account for and report the proceeds of specific revenue sources that are restricted or committed, (c)Capital Projects Funds: used to account for and report financial resources that are restricted, committed, or assigned, and (d) Debt Service Funds: used to account for and report financial resources that are restricted, committed, or assigned. This new standard does not change the total amount of a given fund balance. The categories are more clearly defined to make the nature and extent of the constraints placed on a government's fund balance more transparent. Part of the City's implementation of this statement for Fiscal year 201411 is the formal adoption of the City's definitions of reported fund balances. The term fund balance is used to describe the difference between assets (what is owned) and liabilities (what is owed) reported within a fund. In the past, fund balances have been classified intro three separate components: Reserved, Designated and Undesignated. There are almost always important limitations on the purpose for which all or a portion of the resources of a fund can be used. The force of these limitations can vary significantly, depending on their source. The various components of the new fund balance reporting standard are designed to indicate the extent to which the City is bound by these limitations placed upon the resources.