News Release 03-11-09


GASB Improves the Usefulness of Reported Fund Balance Information

Norwalk, CT, March 11, 2009—The Governmental Accounting Standards Board (GASB) today issued GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. Statement 54 is intended to improve the usefulness of information provided to financial report users about fund balance by providing clearer, more structured fund balance classifications, and by clarifying the definitions of existing governmental fund types.

Fund balance—the difference between assets and liabilities in the governmental fund financial statements—is among the most widely and frequently used information in state and local government financial reports. The GASB developed Statement 54 to address the diversity of practice and the resulting lack of consistency that had evolved in fund balance reporting. To reduce confusion, the new standards establish a hierarchy of fund balance classifications based primarily on the extent to which a government is bound to observe spending constraints imposed upon how resources reported in governmental funds may be used.

Statement 54 distinguishes fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported in the following classifications:

  • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation
  • Committed—amounts constrained by a government using its highest level of decision-making authority
  • Assigned—amounts a government intends to use for a particular purpose 
  • Unassigned—amounts that are not constrained at all will be reported in the general fund.

The new standards also clarify the definitions of individual governmental fund types. It interprets certain terms within the definition of special revenue fund types, while further clarifying the debt service and capital projects fund type definitions. The final standard also specifies how economic stabilization or “rainy-day” amounts should be reported.

“Fund balance reporting on financial statements is critical to understanding the financial health of state and local governments,” states Robert H. Attmore, chairman of the GASB. “Statement 54 sets forth clear criteria for reporting fund balance so that users of governmental financial statements will receive more consistent and understandable information that is useful for making economic, social and political decisions.”

GASB Statement 54 is effective for financial statements for periods beginning after June 15, 2010. Governments that wish to implement earlier than that date are encouraged to do so. To obtain a copy of the statement, call the GASB Order Department at (800) 748-0659 or log on to for more information.

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website,