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{ STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR SUITE 500 7jy (651)296-2551 (Voice) 525 PARK STREET (651)296-4755(Fax) REBECCA OTTO SAINT PAUL,MN 55103-2139 state.auditor,&anosa.state.mn.us(E-mail) STATE AUDITOR 1-800-627-3529(Relay Service) Statement of Position Fund Balances for Local Governments Based on GASB Statement No. 54 Background Governmental Accounting Standards Board's (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, defines the classifications of fund balance based on the focus of the constraints placed on the use of current fund balance. The Statement also identifies the governmental fund type definitions. This Statement of Position addresses only the fund balance classifications and reporting. The requirements of GASB 54 are applicable to all local governments. Implementation was required for the first fiscal year ended June 30, 2011. However, most Minnesota local governments report on a calendar year. For those reporting on a calendar year, the first required year for implementation was the year ended December 31, 2011. In governmental funds,' local government should identify fund balance separately based on a hierarchy of the constraints placed on the use of the financial resources within governmental funds. A local government will classify its fund balances into one of up to 5 classifications: nonspendable, restricted, committed, assigned, and unassigned. While some of the GASB 54 classifications are similar in nature to the classifications under pre-GASB Statement No. 54, the focus is different, and thus, what is classified into these classifications may be different. Fund Balance Classifications/Definitions for Governmental Funds The fund balances of a local government's governmental funds should be reported in the new classifications based on the definitions in the following table: Governmental fund reporting focuses primarily on the sources, uses, and balances of current financial resources and often has a budgetary orientation. The governmental fund category includes the general fund, special revenue funds, capital projects funds, debt service funds, and permanent funds. Codification of Governmental Accounting and Financial Reporting Standards§ 1300.102. Reviewed: July 2012 2010-1003 Revised: July 2012 This Statement of Position is not legal advice and is subject to revision. An Equal Opportunity Employer i.