Where To Find Internal Service Funds In A Cafr

3.1 Accounting

3.1 Accounting Principles and Internal Controls

iii.1.1 Fund Types and Bookkeeping Principles

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3.ane.one.20 Bookkeeping and reporting capabilities

iii.ane.1.30 Fund accounting systems

3.1.1.twoscore Types of funds

Governmental funds

Lawmaking 000 - General (Current Expense) Fund

Code 100 - Special Acquirement Funds

Code 200 - Debt Services Funds

Code 300 - Capital Projects Funds

Code 700 - Permanent Funds

Proprietary funds

Lawmaking 400 - Enterprise Funds

Code 500 - Internal Service Funds

Fiduciary funds

Lawmaking 600 - Fiduciary Funds

Codes 600-609 - Investment Trust Funds

Codes 610-619 - Pension (and Other Employee Benefit) Trust Funds

Codes 620-629 - Individual-Purpose Trust Funds

Codes 630-698 - Custodial Funds

Code 699 - External Investment Pool Fund

3.ane.i.50 Number of funds

three.1.1.lx Reporting capital letter assets

3.1.i.ninety Reporting long-term liabilities

three.one.ane.100 Government-wide financial statements

iii.ane.1.110 Fund financial statements

iii.one.1.120 Budgeting, budgetary control and budgetary reporting

3.1.one.130 Transfer, revenue, expenditure and expense classifications

3.1.ane.140 Common terminology and classifications

iii.1.1.150 Annual financial reports

3.one.1.10 The following principles of accounting and financial reporting are based on those set along in the Governmental Accounting Standards Board'due south (GASB) Codification of Governmental Accounting and Fiscal Reporting Standards. The Bars transmission permits accounting and fiscal reporting that conforms to these principles in all respects and requires GAAP municipalities to account and written report in conformity with these principles, except that the annual study required is not as extensive as the Annual Comprehensive Financial Study (ACFR).

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three.one.1.20 Accounting and reporting capabilities

A governmental accounting system must make information technology possible both: (a) to present fairly and with full disclosure the funds and activities at the authorities in conformity with generally accepted bookkeeping principles; and (b) to determine and demonstrate compliance with finance-related legal and contractual provisions.

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three.ane.1.30 Fund accounting systems

A governmental bookkeeping system should exist organized and operated on a fund ground. A fund is defined as a fiscal and accounting entity with a cocky-balancing gear up of accounts recording cash and other financial resources, together with all related liabilities and rest equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining sure objectives in accordance with special regulations, restrictions, or limitations. Fund financial statements should exist used to written report detailed data about primary government, including its blended component units. The focus of governmental and proprietary fund financial statements is on major funds.

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3.1.1.40 Types of funds

In fund financial statements, governments should written report governmental, proprietary, and fiduciary funds to the extent that they have activities that meet the criteria for using these funds.

Presented below is a organization to classify all funds used by local authorities and the assignment of code numbers to identify each blazon of fund. A 3 digit code is used: the showtime digit identifies the fund type and the next two digits will be assigned by the governmental unit to identify each specific fund.

Governmental funds

Code 000 - General (Current Expense) Fund – should be used to account for and report all financial resource non accounted for and reported in another fund.

Although a local government has to report simply one general fund in its external fiscal reports, the regime can have multiple general subfunds for its internal managerial purposes. These managerial subfunds have to be combined into one general fund for external financial reporting.

Code 100 - Special Revenue Funds – should be used to business relationship for and written report the proceeds of specific acquirement sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects. Restricted revenues are resources externally restricted by creditors, grantors, contributors or laws or regulations of other governments or restricted by law through constitutional provisions or enabling legislation (similar to restricted component of net position used in government-wide reporting). Committed revenues are resources with limitations imposed by the highest level of the government, and where the limitations can exist removed but by a similar activeness of the aforementioned governing trunk. Revenues exercise not include other financing sources (long-term debt, transfers, etc.).

The term proceeds of specific revenue sources establishes that 1 or more than specific restricted or committed revenues should be foundation for a special acquirement fund. They should be expected to continue to contain a substantial portion of the inflows reported in the fund. While GASB Argument 54 has not provided a numeric range for substantial portion of inflows, it was recommended that at least twenty percent is a reasonable limit for reporting a special revenue fund. Local governments demand to consider factors such as by resources history, hereafter resource expectations and unusual current year inflows such every bit debt proceeds in their analysis.

They may utilise the calculation beneath to determine whether an activity would authorize for reporting every bit a special revenue fund.

Other resources (investment earnings and transfers from other funds, etc.) also may be reported in the fund if these resources are restricted, committed, or assigned to the specific purpose of the fund.

Governments should discontinue reporting a special revenue fund, and instead study the fund's remaining resources in the general fund, if the regime no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue sources.

The Argument requires all revenue to exist recognized in the special acquirement fund. If the resources are initially received in another fund, such every bit the general fund, and subsequently remitted to a special acquirement fund, they should non be recognized equally revenue in the fund initially receiving them. They should be recognized as revenue in the special revenue fund from which they will be expended. So, the local governments can either receive resources directly into the special acquirement fund, or account for the resource as bureau deposits in the receiving fund and, after remitting them, recognize them equally revenue to the special revenue fund.

Special revenue funds should not be used to account for resources held in trust for individuals, individual organizations, or other governments.

The full general fund of a composite component unit should exist reported as a special revenue fund.

The state statutes contain many requirements for special funds to business relationship for unlike activities. The legally required funds exercise not always run across GAAP standards for external reporting. So, while the local governments are required to follow their legal requirements, they volition take to brand some adjustment to their fund structure for external fiscal reporting.

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Code 200 - Debt Service Funds – should exist used to business relationship for and report financial resource that are restricted, committed, or assigned to expenditure for master and interest. Debt service funds should be used to report resource if legally mandated. Financial resources that are being accumulated for principal and involvement maturing in future years also should be reported in debt service funds. The debt service transactions for a special cess for which the government is not obligated in any matter should be reported in an bureau fund. Likewise, if the government is authorized, or required to plant and maintain a special assessment bond reserve, guaranty, or sinking fund, GASB Statement vi requires using a debt service fund for this purpose.

Notation: Debt service funds should not be used in proprietary funds (400 and 500). Use enterprise funds (400) or internal service (500) for debt payments related to utilities and other business type activities.

Code 300 - Uppercase Projects Funds – should be used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities or other uppercase assets. Majuscule outlays financed from general obligation bail proceeds should exist accounted for through a capital projects fund. Uppercase projection funds exclude those types of capital letter-related outflows financed by proprietary funds or for assets that will exist held in trust for individuals, individual organizations, or other governments (private-purpose trust funds).

Note: Capital project funds should not exist used in proprietary funds (400 and 500). Employ enterprise funds (400) or internal service (500) for capital payments related to utilities and other business blazon activities.

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Code 700 - Permanent Funds – should be used to account for and study resources that are restricted to the extent that only earnings, and non principal, may be used for purposes that back up the reporting regime'due south programs – that is for the do good of the government or its citizens (public-purpose). Permanent funds practise non include private-purpose trust funds which account for resources held in trust for individuals, private organizations, or other governments.

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Proprietary funds

Code 400 - Enterprise Funds - may be used to report whatsoever activity for which a fee is charged to external users for appurtenances or services. Enterprise funds are required for any activity whose principal revenue sources run across any of the following criteria:

Debt backed solely past a pledge of the cyberspace revenues from fees and charges.
Legal requirement to recover cost. An enterprise fund is required to be used if the cost of providing services for an activity including capital costs (such as depreciation or debt service) must be legally recovered through fees or charges.
Policy decision to recover cost. It is necessary to use an enterprise fund if the authorities'south policy is to establish action fees or charges designed to recover the cost, including capital costs (such equally depreciation or debt service).

These criteria should be applied in the context of the activity's principal revenue source.

The term action generally refers to programs and services. This term is not synonymous with fund. As a practical consequence, if an activity reported equally a separate fund meets any of the 3 criteria, it should be an enterprise fund. Also, if a "multiple action" fund (east.g., general fund) includes a significant activeness whose principal revenue source meets any of these three criteria, the activity should be reclassified as an enterprise fund.

The conclusion of an activity's principal revenue source is a matter of professional judgement. A good indicator of the activity'southward significance may exist comparing pledged revenues or fees and charges to total revenue. For instance, consider a county auditor's office that charges fees to provide a payroll service to various taxing districts. Even if the fee is meant to cover the price of the service, the county auditor office as a whole is primarily supported with tax dollars from the general fund. It would exist allowable in this example to leave the action all inside general fund.

Finding an appropriate fund type requires a careful analysis since there is not ever a clear choice. For example, edifice let fees may be deemed for in the general fund or a special revenue fund in certain circumstances, such as when they are partially supported past taxes. Still, if at that place is a pricing policy to recover the price of issuing those individual building permits, they should exist reported in an enterprise fund.

In addition, GAAP mandate the use of enterprise funds for the separately issued fiscal statement of public-entity risk pools. Public-entity adventure pools also are deemed for as enterprise funds when they are included inside a sponsoring regime's written report, provided the sponsor is non the predominant participant in the organisation. Otherwise, they tin use the general fund.

Dissever funds should not be reported for bail redemption, construction, reserves, or deposits, for whatever utility that is accounted for on the full accrual basis, using either the BARS accounts or a nationally recognized utility chart of accounts such as FERC or NARUC. Separate funds should not exist reported even though bail covenants may stipulate a bail reserve fund, bond construction fund, etc. The bail covenant utilize of the term fund is not the aforementioned as the use in governmental accounting. For bond covenants, fund means only a segregation or split up business relationship, not a self-balancing prepare of accounts. (Meet business relationship 150 in the general ledger nautical chart of accounts.)

Code 500 - Internal Service Funds – may be used to report any activity that provides goods or services to other funds, departments or agencies of the regime, or to other governments, on a price-reimbursement ground. Internal service funds should be used only if the reporting government is the predominant participant in the activity. Otherwise, the action should be reported in an enterprise fund. For more information on accounting for these funds see three.nine.half-dozen and for reporting see iv.iii.6.

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Fiduciary funds

Lawmaking 600 - Fiduciary Funds – should exist used to account for assets, including capital assets (GASB 34, Paragraph 106), held by a authorities in a trustee chapters or every bit a custodian for individuals, individual organizations, other governmental units, and/or other funds. These include (a) investment trust funds, (b) pension (and other employee benefit) trust funds, (c) private-purpose trust funds, and (d) custodial funds.

For more information on determining if a transaction is fiduciary please meet the Determining Fiduciary Custodial Activities page.

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Codes 600-609 - Investment Trust Funds – should be used to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in a trust that meets the following criteria: the avails are (a) administered through a trust in which the government itself is not a casher, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government.

In addition to the trust criteria requirements above, all individual investment accounts are required to exist reported in an Investment Trust Fund.

Codes 610-619 - Pension (and Other Employee Do good) Trust Funds – should be used to report fiduciary activities for the following:

Pension plans and OPEB plans that are administered through trusts that meet the criteria in paragraphs 3 of GASB Argument 67 or paragraph 3 of GASB Argument 74, respectively.
Other employee benefit plans for which (1) resource are held in trust that meets the following criteria: the avails are (a) administered through a trust in which the regime itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government and (2) contributions to the trust and earnings on these contributions are irrevocable.

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Codes 620-629 - Private-Purpose Trust Funds – should exist used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds, and (b) are held in a trust that meets the following criteria: the assets are (a) administered through a trust in which the government itself is not a casher, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government.

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Lawmaking 630-698 - Custodial Funds – should exist used to report all fiduciary activities that are not required to exist reported in pension (and other employee do good) trust funds, investment trust funds or private purpose trust funds. The external portion of the investment pools that are not held in trust that meets criteria listed in a higher place should be reported in a split external investment pool fund column under the custodial funds nomenclature.

Note: The custodial funds are required to be used by concern-type activities and enterprise funds, except when the resources will normally exist held for less than 90 (ninety) days.

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Lawmaking 699 - External Investment Pool Fund – The external portion of the investment pools that are not held in trust and meet criteria listed above. Although this is considered a custodial fund, it should exist reported in a separate external investment puddle fund column under the custodial funds classification.

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3.1.1.50 Number of funds

Governments should establish and maintain those funds required by law and sound financial administration. Only the minimum number of funds consistent with legal and operating requirements should be established. Using numerous funds results in inflexibility, undue complexity and inefficient financial assistants.

Local governments should periodically undertake a comprehensive evaluation of their fund structure to ensure that individual funds that became superfluous are eliminated from accounting and reporting.

Elected officials should be educated to the fact that accountability may exist achieved effectively and efficiently by judicious use of department, program and other available account coding or cautious use of managerial (internal) funds.

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three.1.ane.60 Reporting capital letter assets

A clear distinction should be made between full general upper-case letter avails and capital assets of proprietary and fiduciary funds. Capital assets of proprietary funds should be reported in both the authorities-broad and fund financial statements. Capital assets of fiduciary funds should be reported but in the argument of fiduciary cyberspace position. All other capital letter assets of the government are full general capital assets. They should non be reported as assets in governmental funds only should be reported in the governmental activities cavalcade in the authorities-wide statement of cyberspace position. The Capital Assets (BARS three.3.ix, 3.3.10 and three.three.11) sections of the Confined manual provide additional information regarding accounting and reporting of majuscule assets.

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3.ane.ane.xc Reporting long-term liabilities

A clear stardom should be fabricated betwixt fund long-term liabilities and full general long-term liabilities. Long-term liabilities direct related to and expected to be paid from proprietary funds should be reported in the proprietary fund statement of net position and in the government-wide statement of net position. Long-term liabilities directly related to and expected to be paid from fiduciary funds should be reported in the statement of fiduciary internet position. All other unmatured full general long-term liabilities of the governmental unit should not be reported in governmental funds but should be reported in the governmental activities column in the government-wide statement of cyberspace position.

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Measurement focus and basis of bookkeeping in the basic financial statements

3.one.i.100 Government-wide financial statements

The government-wide statement of net position and statement of activities should exist prepared using the economical resources measurement focus and the accrual basis of bookkeeping. Revenues, expenses, gains, losses, avails, and liabilities resulting from exchange and substitution-similar transactions should be recognized when the substitution takes place. Revenues, expenses, assets, and liabilities resulting from nonexchange transactions should be recognized in accordance with the GASB Statements 24 and 33.

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3.ane.i.110 Fund fiscal statements

In fund financial statements, the modified accrual or accrual footing of accounting, as appropriate, should exist used in measuring financial position and operating results.

a. Financial statements for governmental funds should be presented using the current financial resources measurement focus and the modified accrual basis of bookkeeping. Revenues should be recognized in the accounting period in which they go bachelor and measurable. Expenditures should be recognized in the accounting menstruum in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term liabilities, which should exist recognized when due.

b. Proprietary fund statements of net position and revenues, expenses, and changes in fund internet position should exist presented using the economical resources measurement focus and the accrual ground of accounting.

c. Fiscal statements of fiduciary funds should exist reported using the economic resources measurement focus and the accrual footing of accounting, except for the recognition of certain liabilities of defined benefit alimony plans and sure postemployment healthcare plans.

d. Transfers should be reported in the accounting menses in which the interfund receivable and payable ascend.

Note: The diverse fund types may exist grouped in the following manner to more than clearly portray their relationship to an accounting ground:

Period of Current Financial Resources Measurement Focus Funds – use the modified accrual ground:

000	General (Electric current Expense) Fund
100	Special Revenue Funds
200	Debt Service Funds
300	Capital Projects Funds
700	Permanent Funds

Flow of Economic Resources Measurement Focus Funds – apply total-accrual basis:

400	Enterprise Funds
500	Internal Service Funds
600-609	Investment Trust Funds
610-619	Pension (and Other Employee Benefit) Trust Funds
620-629	Private-Purpose Trust Funds
630-698	Custodial Funds
699	External Investment Puddle Fund

3.ane.one.120 Budgeting, budgetary command and monetary reporting

a. An annual/biennial upkeep should be adopted by every authorities.

b. The accounting organisation should provide the basis for advisable budgetary command.

c. Budgetary comparison schedules should be presented as required supplementary data for the general fund and for each major special revenue fund that has a legally adopted annual/biennial budget. The budgetary comparison schedule should present both (a) the original and (b) the final appropriated budgets for the reporting menstruum ad well every bit (c) actual inflows, outflows, and balances, stated on the government'due south budgetary basis.

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three.1.i.130 Transfer, revenue, expenditures and expense account classifications

a. Transfers should be classified separately from revenues and expenditures or expenses in the basic financial statements.

b. Gain of general long-term debt issues should be classified separately from revenues and expenditures in the governmental fund financial statements.

c. Governmental fund revenues should exist classified by fund and source. Expenditures should be classified by fund, function (or program), organisation unit, action, character, and principal classes of objects.

d. Proprietary fund revenues should be reported by major sources, and expenses should be classified in essentially the same fashion as those of similar business organizations, functions, or activities.

eastward. At a minimum, the statement of activities should present:

(ane) Activities accounted for in governmental funds by function, to coincide with the level of detail required in the governmental fund statement of revenues, expenditures, and changes in fund balances.

(2) Activities accounted for in enterprise funds by unlike identifiable activities.

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3.1.1.140 Mutual terminology and nomenclature

A mutual terminology and classification should be used consistently throughout the budget, the accounts, and the fiscal reports of each fund.

3.1.1.150 Annual financial reports

a. Full general purpose external financial reports should be prepared and published. Governments engaged in governmental and business-blazon activities should include, at a minimum:

(i) Management'due south discussion and analysis (Doc&A).

(2) Basic financial statements. The bones financial statements should include:

(a) Authorities-wide financial statements.
(b) Fund financial statements.
(c) Notes to the fiscal statements.

(3) Required supplementary information (RSI) other than MD&A.

Governments engaged simply in business-blazon activities should present only the fiscal statements required for proprietary funds. They should include:

(1) Management'due south discussion and analysis (MD&A)

(two) Proprietary fund financial statements consisting of:

(a) Argument of internet position
(b) Statement of revenues, expenses, and changes in fund net position
(c) Argument of cash flows

(3) Notes to the financial statements

(four) Required supplementary information (RSI) other than Doc&A, if applicable.

b. The statements and reports listed above follow national standards of fiscal reporting. They should non be dislocated with legal reporting requirements , which are prescribed by the Country Accountant's Office for all local governments in Washington Country. The legal requirements are consistent with these national standards, merely they are non identical. Specific legal reporting requirements are contained in reporting part of this Manual.

c. An ACFR may be prepared and published, covering all activities of the principal government (including its composite component units) and providing an overview of all discretely presented component units of the reporting entity including introductory section, management's discussion and analysis (Doc&A), basic financial statements, required supplementary information other than Doc&A, combining and individual fund statements, schedules, narrative explanations, and statistical section. The reporting entity is the primary government (including its blended component units) and all discretely presented component units.

d. The financial reporting entity consists of (1) the primary government, (2) organizations for which the main regime is financially accountable, and (iii) other organizations for which the nature and significance of their human relationship with the primary government are such that exclusion would cause the reporting entity' basic financial statements to be misleading or incomplete. The reporting entity's government-wide fiscal statements should display data almost the reporting government as a whole distinguishing between the full principal government and its discretely presented component units too as betwixt the primary authorities'south governmental and business-type activities. The reporting entity's fund financial statements should present the chief government's (including its blended component units, which are, in substance, part of the main government) major funds individually and nonmajor funds in the aggregate. Funds and component units that are fiduciary in nature should be reported only in the statements of fiduciary cyberspace position and changes in fiduciary net position.

due east. The nucleus of a financial reporting entity usually is a primary government. However, a governmental organization other than a main regime (such as a component unit, joint venture, jointly governed organisation, or other stand-alone government) serves as the nucleus for its own reporting entity when it problems carve up financial statements. For all of these entities, the provisions the GASB Statement xiv should be applied in layersfrom the bottom up. At each layer, the definition and display provisions should be applied before the layer is included in the fiscal statements of the next level of the reporting government.

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This section was final edited past SAO on 01/06/22