October 2001: Fund Financial Statements

Issued To: County, City, Town and Village Chief Fiscal Officers, School District and BOCES Business Officials

Annual Financial Reporting to OSC

Historically municipalities, school districts and BOCES have maintained their records and prepared their annual financial reports for submission to the Comptroller on a fund-by-fund basis. As stated in our June 2002 accounting release, OSC will continue the policy of fund level reporting for meeting statutory reporting requirements under General Municipal Law. OSC will however make the necessary adjustments to the fund level statements that are needed to permit issuance of the government-wide financial statements for those local governments that choose to implement GASB Statement No. 34.

Purpose of Bulletin

The purpose of this bulletin is two-fold:

  • First, we want to assure those local governments not implementing GASB Statement No.34 that the upcoming adjustments that will be made to the fund level statements for 2002 fiscal year end reporting will not have a major impact on their record keeping and/or financial reporting to OSC. Our January 2001 accounting release focused on the changes associated with accounting and reporting of trust funds. Other changes, dealing with terminology and account codes changes, will be addressed in a future bulletin.
  • Second, we want to provide those local governments contemplating implementation of GASB Statement No. 34 with some basic information about the fund financial statements that are the third element of the model. The following information is provided for those local governments contemplating the implementation of GASB Statement No. 34.

Fund Financial Statement

For governments that implement GASB Statement No. 34, the fund financial statements will accompany Management's Discussion and Analysis (February 2001 bulletin) and the government-wide statements (March 2001 bulletin). The fund financial statements are used to report additional detailed information about the primary government not found in the government-wide statements and focus on major funds of the primary government.

What is a "Major" Fund?

For each of the required fund statements, local governments will report separate columns for the general fund, which is always considered a major fund, and for each major governmental and enterprise fund. A major fund is defined as those funds whose revenues, expenditures/expenses, assets or liabilities are at least 10 percent of the total for their fund category (governmental or enterprise) and 5 percent of the aggregate of all governmental and enterprise funds in total. These tests to determine major funds must be applied to each fund individually including each capital project and/or each special district. A government may choose to report any other governmental or enterprise fund as a major fund if it believes that the fund is important to the users of its financial statements.

Overview of the Fund Financial Statements
Fund Category Governmental Proprietary Fiduciary
Kinds of Funds General
Special Revenue
Capital Projects
Debt Service
Internal Service
Pension Trust
Investment Trust
Private Purpose Trust
Required Statements** Balance Sheet
Statement of Revenues, Expenditures and Changes in Fund Balance
Statement of Net Assets
Statement of Revenues, Expenses and changes in Net Assets
Statement of Cash Flows
Statement of Net Assets
Statement of Changes in Net Assets
Basis of Accounting * Modified Accrual Full Accrual Full Accrual
Measurement Focus* Current Financial Resources Economic Resources Economic Resources

* Basis of Accounting refers to the timing of the recognition of a transaction or event (when) while Measurement Focus refers to the type of transaction or event (what) that is being measured.

** (Examples from GASB Statement 34 included in this bulletin, copyright by the Governmental Accounting Standards Board, 401 Merritt 7, Norwalk, CT 06856 are reprinted by permission.)

Required Statements

Balance sheet - The basic statement of position for governmental funds reports the difference between assets and liabilities as fund balance. Fund balance is divided into reserved and unreserved components. This is the same statement that is contained in the AUD and ST3. Statement of revenues, expenditures and changes in fund balance-The basic statement of activities for governmental funds reports revenues by source and expenditures by function just as they are currently reported. Since long-term liabilities and capital assets have been incorporated into the government-wide statements the accounts groups will no longer be reported in the statements. A revised supplemental schedule will be included in the AUD and ST3 to continue to accumulate this information. Statement of net assets- The basic statement of position for proprietary funds reports the difference between assets and liabilities as net assets. Net assets are divided into invested in capital assets, restricted and unrestricted.Statement of revenues, expenses and changes in fund net assets- The basic statement of activities for proprietary funds distinguishes operating and non-operating revenues and expenses.Statement of cash flows - This statement will now be required to be prepared on the direct method where operating cash flows will be reported by source. This is not a change for local governments since OSC has already required this method.

Reconciliation of Government-wide and Fund Financial Statements

The Government-wide Financial Statements and Fund Financial Statements have a different measurement focus and basis of accounting. To help the user understand and assess the relationship between fund-based and government-wide financial statements, local governments will be required to present a summary reconciliation that will show the interplay between the two types of statements. Detailed information pertaining to the GASB Statement No. 34, as well as an implementation guide, is available from GASB. The GASB web site, with links to many other pertinent sites, can be accessed at http://www.gasb.org/.

GASB can also be contacted at:
401 Merritt 7
P.O. Box 5116
Norwalk, CT 06856