June 2000: Accounting System Update - Elimination of Risk Retention Fund

Issued To: County, City, Town and Village Chief Fiscal Officers

Purpose of Bulletin

This bulletin is being sent to communicate accounting and reporting changes that may affect your local government.

Elimination of Risk Retention Fund (CS)

If your local government does not have a CS fund or has already eliminated it, this will not affect you. The Risk Retention Fund (CS) was originally established to account for risk financing and insurance activity in a single fund using the modified accrual basis of accounting. As a result of pronouncements from the Governmental Accounting Standards Board (GASB), the Risk Retention Fund (CS) will be eliminated from the Uniform System of Accounts for fiscal years ending after December 31, 2000.

Local governments should record self insurance activity in the General Fund (A), the Self Insurance Fund (MS), or within individual funds financing the activity. The same revenue, expenditure, and general ledger account codes used in the CS Fund are available in these funds. The fund balance in the CS Fund should be eliminated through a residual equity transfer (a transfer of equity between funds).

Upon the elimination of the CS Fund, the following entries should be made in the fund/funds that will be reporting the activity:

  Debit Credit
Asset Accounts (from CS Fund) xxx  
        Liability accounts (from CS Fund)   xxx
        Fund Balance accounts (from CS Fund)   xxx

A corresponding entry should be made to close out the CS Fund.

In the Annual Update Document (AUD) to the State Comptroller, code CS8019 (residual equity transfer) should be used to reduce the fund balance in the CS Fund and code 8019 to increase the fund balance in the fund/funds now being used. If the MS Fund is used to account for these activities, the full accrual basis of accounting must be used to record revenues and expenses in accordance with GAAP.