[Ord. No. 2017-1250 § 1, 10-16-2017]
The Town desires to establish guidelines for preserving an adequate
unassigned fund balance in order to sustain financial stability for
the Town and to provide for prudent management of the Town's financial
reserves.
[Ord. No. 2017-1250 § 1, 10-16-2017]
The cumulative difference of all revenues and expenditures.
Where the term "fund balance" is utilized, the term "retained earnings"
may be substituted for enterprise funds.
Fund balance amounts will be classified as follows:
NON-SPENDABLE FUND BALANCEIncludes amounts that cannot be spent because they are not in spendable form, or they are legally or contractually required to be maintained intact.
RESTRICTED FUND BALANCEAmounts restricted to specific purposes.
COMMITTED FUND BALANCEAmounts that can only be used for specific purposes as pursuant to official action by the Board prior to the end of the reporting period.
ASSIGNED FUND BALANCEAmounts the Town intends to use for a specific purpose but is neither restricted nor committed. The Town Council has the authority to assign fund balances.
UNASSIGNED FUND BALANCERepresents fund balance that has not been assigned to other funds and has not been restricted, committed, or assigned to specific purposes within the general ledger.
[Ord. No. 2017-1250 § 1, 10-16-2017]
The order of spending, regarding the restricted and unrestricted
fund balance, when an expenditure is incurred for which both restricted
and unrestricted fund balance is available should first reduce restricted
fund balance and then unrestricted fund balance. The order of spending
regarding unrestricted fund balance is that committed amounts should
be reduced first, followed by the assigned amounts, and then the unassigned
amounts when expenditures are incurred for purposes for which amounts
in any of those restricted fund balance classification could be used.
[Ord. No. 2017-1250 § 1, 10-16-2017]
A.
In accordance with GASB-54, it is the policy of the Town that fund
balance amounts be reported as committed fund balance only after formal
action and approval by the Council. The action to constrain amounts
in such a manner must occur prior to year end; however, the actual
dollar amount may be determined in the subsequent period.
B.
For example, the Council may approve a motion prior to year end to
report within the year-end financial statements, if available, up
to a specified dollar amount as committed fund balance for capital
projects. The exact dollar amount to be reported as committed fund
balance for capital projects may not be known at the time of approval
due to the annual financial audit not yet being completed. This amount
can be determined at a later date when known and appropriately reported
within the year-end financial statements due to the governing body
approving this action before year end.
C.
After approval by the Council, the amount reported as committed fund
balance cannot be reversed without utilizing the same process required
to commit the funds. Therefore, in accordance with GASB-54, it is
the policy of the Town that funds can only be removed from the committed
fund balance category after motion and approval by the Council.
[Ord. No. 2017-1250 § 1, 10-16-2017]
In accordance with GASB-54, funds that are intended to be used
for a specific purpose but have not received the formal approval action
at the governing body level may be recorded as assigned fund balance.
Likewise, redeploying assigned resources to an alternative use does
not require formal action by the governing body.
