What does restricted fund balance mean on the CPA exam?
Restricted fund balance. Fund balance constrained to a purpose by an external party, a constitutional provision, or enabling legislation. The constraint comes from outside the government, which is what separates it from committed.
Defined against GASB 54.
Which CPA exam sections use restricted fund balance?
Restricted fund balance appears in the FAR section of the CPA exam.
What is the difference between restricted fund balance and committed fund balance?
Restricted fund balance is constrained by an EXTERNAL party: a creditor, a grantor, another government, or enabling legislation. Committed fund balance is constrained by the government’s own highest level of decision-making authority, through a formal action taken before year end. External versus self-imposed is the whole distinction, and only the General Fund reports a positive unassigned balance. (GASB 54)
Other terms defined against GASB 54
- committed fund balance: Fund balance constrained to a purpose by formal action of the government's own highest level of decision-making authority, and removable only by the same kind of action.
Related terms
- enterprise fund: A proprietary fund used where a government charges outside users for goods or services, run on the full accrual basis like a business.
- internal service fund: A proprietary fund that supplies goods or services to other parts of the same government on a cost-reimbursement basis, such as a motor pool.
- required supplementary information: Schedules a government must present outside the basic statements, such as budgetary comparisons and pension trend data.