Has GASB Statement No. 54 Had a Major Impact on Reporting Unrestricted Fund Balances?

Abstract

In February 2009, the Governmental Accounting Standards Board (GASB) issued its Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions (GASB 2009). The Statement is effective for periods beginning after June 15, 2010. The objective of GASB Statement No. 54 is to improve transparency and to enhance the usefulness of fund balance information by clarifying existing governmental fund type definitions and providing fund balance classifications that can be more consistently applied (GASB 2009, ¶2). Most governments implemented GASB No. 54 in 2011. But has there been a major shift in how these net resources are reported? To answer this question, a study was undertaken by Radford University’s Governmental and Nonprofit Assistance Center (RU-GNAC 2012) to explore the changes in fund balance reporting of the general fund for selected cities and counties in the Commonwealth of Virginia. The purpose of this paper is to present: (1) a brief overview of the GASB and its new fund balance Statement, (2) some historical context that led up to the issuance of the new Statement, (3) a comparison of the old fund balance standards to the provisions of Statement No. 54, (4) a summary of the GNAC results of the study, and (5) some insights and conclusions on what impact GASB Statement No. 54 has had on fund balance reporting.