What is a committed fund balance in a governmental funds balance sheet? How does it differ from a restricted fund balance?

DQ 1 What is a committed fund balance in a governmental funds balance sheet? How does it differ from a restricted fund balance?

Restrictions cannot be changed or lifted without the consent of the resource providers.

Fund balance should be reported as restricted when constraints placed on the use of resources are either:

– Externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments; or

– Imposed by law through constitutional provisions (Charters) or enabling legislation.


• Enabling legislation, authorizes a government to assess, levy, charge, or otherwise mandate payment of resources (from external resource providers) and includes a legally enforceable requirement that those resources be used only for the specific purposes stipulated in the legislation.

• Legal enforceability means that a government can be compelled by an external party-such as citizens, public interest groups, or the judiciary-to use resources created by enabling legislation only for the purposes specified by the legislation. Legal enforcement exists upon receipt of resources.


Committed Fund Balance

• Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level – council or board of trustees – of decision-making authority

• Constraints are imposed by the government separate from the authorization to raise the revenue

• Committed resources/amounts are not considered to be legally enforceable as with restricted.

• Committed fund balance also includes contractual obligations to the extent that existing resources in the fund have been specifically committed (encumbered) for use in satisfying those contractual requirements.

• Constraint can be removed or changed only by taking the same highest level action

• Action to constrain resources should occur prior to end of year, though the exact amount may be determined subsequently

• Ability to transfer resources by court order is not the same action of the governing body that created the constraint.

Committed resources are generally unrestricted revenues authorized by state statute, ordinance, or resolution for which the government may commit the use of the revenue for a specific purpose. Examples of committed fund balance/resources include:

– Membership or entrance fees to a swimming pool to be used for swimming pool operations

– Recreation program fees to be used to recreation program expenses

– Cemetery charges for grave openings, burials, foundations, etc. To be used for cemetery operations.

Court fines, forfeitures, and costs cannot be committed by governing board as those

revenues are directed to specific funds or the general fund by State statute.




DQ 2 Both notes to the financial statements and required supplementary information (RSI) must be included in a government’s CAFR. Does it matter if information is provided in notes as opposed to RSI?

As with business financial statements, notes are considered an integral part of the basic financial statements of governments. Voluminous though they may be, notes are too important to be ignored. Per Statement No. 34, and consistent with existing standards, notes should include explanations of the accounting principles used in preparing the financial statements, schedules of changes in capital assets and long-term liabilities, schedules of future debt service requirements, disclosures about contingent liabilities, and other information that might affect users’ interpretation of the amounts reported in the statements themselves.  Required supplementary information (RSI) is information that the GASB requires to be presented with, but not as part of, the basic financial statements. It includes management’s discussion and analysis (MD&A), which is presented before the basic financial statements, as well as information (such as budgetary comparisons and pension schedules) that is presented after the notes. RSI has much in common with notes. Both include GASB-mandated schedules and data. However, while notes are considered part of the basic financial statements, RSI is not. Therefore, RSI may be subject to a lower level of auditor scrutiny than notes.

Granof, M. H. & Wardlow, P. S. (2011). Core concepts of government and not-for-profit accounting (2nd ed.). New York, NY: Wiley & Sons.






LT DQ 3 What are the main reporting options available to government colleges and universities? Do they have to prepare fund statements? Explain.

Public colleges and universities must adhere to the same GASB pronouncements as other types of governments. In light of the similarity between government and not-for-profit colleges and universities and the differences between GASB and FASB standards.


Accounting and reporting by colleges and universities pose especially thorny issues to the

GASB, owing to several considerations, some of which are that

1. Public and private institutions have much in common, so comparability is clearly desirable.

2. Most colleges and universities have a long tradition of using an accounting and reporting model that had been endorsed by the AICPA in an industry audit guide. However, some institutions, most notably community colleges, have used the standard government model.

3. Colleges and universities differ from other governments in how they are funded and managed.


The GASB decided that colleges and universities should be subject to the same reporting requirements as other special-purpose governments—but with a loophole.  The loophole is that most public institutions satisfy the GASB’s criteria for entities engaging exclusively in business-type activities. Public colleges and universities have a choice: they may elect to report as special-purpose entities that are engaging (1) only in business-type activities, (2) only in governmental activities, or (3) in both.


A special-purpose government that is engaging only in business-type activities need prepare only a statement of net assets, a statement of revenues and expenses, and a statement of cash flows (direct method). It need not present detailed fund statements, but it should include an MD&A, notes, and RSI. The statement of net assets and statement of revenues and expenses, of course, have to be prepared on a full accrual basis. They must include capital assets and depreciation.


Granof, M. H. & Wardlow, P. S. (2011). Core concepts of government and not-for-profit accounting (2nd ed.). New York, NY: Wiley & Sons.


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