Hopkins County Commissioners Court this week adopted a new fund balance policy to meet standards recommended by the Governmental Accounting Standards Board.
“When the outside auditors are here, you will often hear them talk about GASB. County government operates under GASB. That’s Governmental Accounting Standards Board. They set the rules,” Hopkins County Auditor Shannah Walker told commissioners when proposing the fund balance policy.
“Established in 1984, GASB is the independent, private-sector organization based in Norwalk, Connecticut, that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles. GASB standards are recognized authoritatively by state and local governments, state boards of accountancy, and the American Institute of CPAs .
“GASB recommends that we have a fund balance policy to protect the future of Hopkins County, which we don’t have in place now,” Walker said.
Most of the document, Walker said, simply explains the funds and how money is put in place. The last paragraph, however, involves the new policy.
“Hopkins County will maintain a minimum assigned fund balance in its general fund ranging from 30 to 35 percent of the subsequent year’s budgeted expenditures and outgoing transfers. This minimum fund balance is intended to provide stabilization in case of unforseen events that may occur such as emergencies, contingencies, revenue shortfalls or budgetary imbalances. If it is determined that the county is below this minimum established fund balance level, then the governing body will be informed of its condition and take necessary budgetary steps to bring the fund balance level into compliance with this policy through budgetary actions,” Walker read of the new policy.
GASB recommends a minimum of 25 percent. However, due to a health fund balance, the outside auditor recommends that the county have 4 months worth of reserve put back at all times. For the county, that would be 30 to 35 percent, which would account for increases in costs as well, Walker explained.