What defines an assigned fund balance?

An assigned fund balance is defined as the portion of a fund balance that is intended to be used for specific purposes by the governing body or an appropriate official. This designation indicates that these funds are set aside for a particular future use that has been identified, reflecting a commitment to using the resources in a manner that supports future plans or projects.

This definition aligns with the concept of an assigned fund balance, where it is not merely a residual or surplus amount, but rather a specific allocation made by the government entity to ensure that certain identified needs are met. Such a designation allows for clearer financial reporting and accountability.

In contrast, the other definitions do not encapsulate the essence of an assigned fund balance. For instance, balancing funds after obligations have been settled does not reflect any designation for future use, while excess funds from surplus revenues do not necessarily imply a specific intent for those funds. Permanently restricted funds pertain to situations where constraints are applied by external legislation or donors, which differ fundamentally from the voluntary nature of assigning a fund balance.