STATEMENT 54: Implementation Problems and Solutions

In March 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The objectives of the new standards are to improve the usefulness and comparability of fund balance information, by reporting fund balance in more intuitive and meaningful components and clarifying the definitions of the types of governmental funds. GASB and many practitioners believe that the current fund balance classifications -- reserved fund balance, unreserved-designated fund balance and unreserved-undesignated fund balance -- are problematic because the standards defining them are vague, leading to considerable variation in how governments report fund balance and divergence from the intent of the standards. This article discusses the new fund balance classifications adopted in Statement 54. Next, this article summarizes the governmental fund type definitions in Statement 54. Finally, this article discusses the implementation timeline and potential implementation problems and solutions.