Finance

Issue

Are there any activities that meet the criteria established in Statement #34 for enterprise reporting?

Reference

¶67 of GASB Statement #34 established certain criteria to determine whether an activity for which a fee is charged to external users is required to be reported as an enterprise fund.  If any one of the following criteria is met, the activity must be reported as an enterprise fund:

1. The activity is financed with debt that is secured by a pledge of the net revenues from fees and charges of the activity.
2. Laws and regulations require that the activity’s costs of providing services, including capital costs (such as depreciation and debt service), be recovered with fees and charges, rather than with taxes or similar revenues.
3. The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).

These criteria do not require insignificant activities of governments to be reported as enterprise funds.

Questions 160-164 in the Implementation Guide provide more guidance.  The term activity as used in paragraph 67 is not synonymous with fund.  Consequently:

If an activity accounted for as a separate fund meets any of the criteria, that fund should be reported as an enterprise fund, and

If a “multiple activity” fund (such as the General Fund) includes a significant activity whose principal revenue source meets any of the criteria, that activity should be reclassified as an enterprise fund

Evaluation

Stormwater Utility

Building Department

Building Code Compliance

Department of Environmental Resources Management (DERM)

Position

The Stormwater Utility activity, the Building Department activity, Building Code Compliance activity and the Department of Environmental Resources Management activity were found to be insignificant activities within the general fund and therefore are not required to be reported as enterprise funds. 

The Stormwater Utility financial activity is separately accounted for in the County’s financial system in fund type SU, but for reporting purposes is reported as part of the General Fund.  The fund balance for the Stormwater Utility is reserved within the General Fund.