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<DIV dir=ltr align=left><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Hello
CAFR Accountants,</SPAN></DIV>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Now that we have completed
the CAFR, SARS is refocusing its attention on GASB 54 and the
fund balance reporting requirements that are effective for FY
2011.<o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">In late May and again in
mid-September 2010, SARS emailed agencies the <B
style="mso-bidi-font-weight: normal">d23 fund tracking sheet</B> to use to list
the GASB 54 fund balance category for each of your agency's governmental
d23 funds (special revenue, capital projects, debt service and permanent
funds). As we receive the completed forms, we are checking to ensure
that all governmental funds have been assigned a GASB 54 code and that the
assigned codes look reasonable. We plan to upload this data into R*STARS
once the review process is completed.<o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left> </P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Based on the tracking sheets
submitted to date, we realize there are some areas that need additional
clarification: </SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left> </P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">1.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">GASB 54 Code R1.</SPAN></B><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"> The GASB 54 category <B
style="mso-bidi-font-weight: normal">R1</B> represents resources that are
restricted by <B style="mso-bidi-font-weight: normal"><I
style="mso-bidi-font-style: normal">federal</I> </B>grants, <B
style="mso-bidi-font-weight: normal"><I
style="mso-bidi-font-style: normal">federal </I></B>laws, or <B
style="mso-bidi-font-weight: normal"><I
style="mso-bidi-font-style: normal">federal</I></B><I
style="mso-bidi-font-style: normal"> </I>regulations. <U>It should not be used
for resources that are restricted by laws or regulations of the State of
<st1:State w:st="on"><st1:place w:st="on">Oregon</st1:place></st1:State> or
other entities</U>.</SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><SPAN
style="mso-spacerun: yes"></SPAN></SPAN> </P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">2.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Active versus inactive governmental
funds.</SPAN></B><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"> If your
agency has d23 funds that are still in <B
style="mso-bidi-font-weight: normal">Active</B> status, but are not being
used, the fund should either be: (a) inactivated or (b) assigned a GASB 54
category. The GASB 54 code will soon be an SFMS system requirement for <I
style="mso-bidi-font-style: normal">all</I> active governmental
funds.</SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">3.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Nonspendable fund
balance.</SPAN></B><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"> While <B
style="mso-bidi-font-weight: normal">nonspendable</B> is one of the GASB 54 fund
balance categories, it cannot be assigned to the entire fund balance of an
individual d23 fund. The nonspendable category will be designated as the result
of the transaction codes used to record certain nonspendable resources
(inventory, prepaids, etc). The d23 fund in which a nonspendable balance
is reported must be assigned one of the standard GASB 54 categories listed on
the d23 fund tracking sheet, using the same process to determine that category
as is used for all other governmental funds.</SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">4.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Reference column – required
information.</SPAN></B><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"> For
fund balances that are restricted by the Constitution or enabling legislation,
as well as committed fund balance, the applicable constitutional or statutory
reference must be entered in the <B
style="mso-bidi-font-weight: normal">Reference</B> column on the tracking sheet.
This information will then be uploaded into a special description field on the
d23 fund profile. The description field is limited to 40 characters (including
any spaces). On the d23 fund tracking sheet, please limit the information in the
<B style="mso-bidi-font-weight: normal">Reference</B> column to 40 characters.
However, you may want to add more information on the copy that you keep for your
files.</SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">5.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Constitutional
restrictions.</SPAN></B> <SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Please note, for resources
restricted by the Constitution, the reference information must be the applicable
article, section and subsection of the Oregon Constitution. Lottery funds,
including lottery bond debt service funds, should be considered restricted by
the Constitution, Article XV, Section 4, subsection
(4)(d).<o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.25in; TEXT-INDENT: -0.25in; mso-list: l0 level1 lfo1; tab-stops: list .25in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">6.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><B style="mso-bidi-font-weight: normal"><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Budget bills.</SPAN></B><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"> Budget bills should not be the
basis for determining the GASB 54 category that is assigned to an individual d23
fund. The exception we noted earlier that warrants
repeating involves a d23 fund that accounts for resources for which
the only constraint on spending of resources is contained in the agency’s budget
bill. In this situation, if you cannot find:<o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.75in; TEXT-INDENT: -0.25in; mso-list: l0 level2 lfo1; tab-stops: list .75in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">a.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Legislation that both authorizes the
collection of a revenue and places constraints on its use (restricted fund
balance), <U>or</U></SPAN> <U><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p></o:p></SPAN></U></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt 0.25in" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.75in; TEXT-INDENT: -0.25in; mso-list: l0 level2 lfo1; tab-stops: list .75in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">b.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">One piece
of legislation that authorizes collection of the revenue and another that places
constraints on its use (committed fund balance), <U>and</U></SPAN> <SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: 3pt"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.75in; TEXT-INDENT: -0.25in; mso-list: l0 level2 lfo1; tab-stops: list .75in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">c.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">The only
constraint on how to spend the resources is found in the agency budget
bill,</SPAN> <SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.75in; TEXT-INDENT: -0.25in; mso-list: l0 level2 lfo1; tab-stops: list .75in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">d.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">There is
no basis to categorize the fund balance as either restricted or
committed.</SPAN> <SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr
style="MARGIN: 0in 0in 0pt 0.75in; TEXT-INDENT: -0.25in; mso-list: l0 level2 lfo1; tab-stops: list .75in"
align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: Arial"><SPAN
style="mso-list: Ignore">e.<SPAN
style="FONT: 7pt 'Times New Roman'">
</SPAN></SPAN></SPAN><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Instead,
classify the fund balance as <STRONG>assigned</STRONG><SPAN
class=362083722-06012011><FONT color=#0000ff> <FONT color=#000000>(GASB
54 code A1)</FONT></FONT></SPAN>. It is the state’s intent to spend the
money for a certain purpose, but there is no legislation (other than the budget
bill) limiting it to that purpose. The resources may easily be diverted to
another purpose, should it be desirable or necessary.</SPAN> <SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left> </P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Effective<SPAN
class=362083722-06012011> immediately</SPAN>, the GASB 54 fund balance
category and reference information will be required to process all new
governmental d23 fund requests. The D23 fund request form will be modified
shortly to provide a place to supply that information.</SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt" align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">We initially asked agencies to
submit the completed GASB 54 tracking sheet to their SARS analyst by
January 4 (yesterday); that deadline has been extended to <B
style="mso-bidi-font-weight: normal">Friday, January 7th</B>. <U>Please
let your SARS analyst know if you have questions on the GASB 54
categories or will not be able to meet this deadline</U>. <o:p></o:p></SPAN></P>
<P class=MsoNormal dir=ltr style="MARGIN: 0in 0in 0pt"
align=left><o:p> </o:p></P>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA">We
are attaching the training documents (the guide to identifying the appropriate
fund balance category and the special revenue fund guide) again for your
reference, as well as the d23 fund tracking sheet.<SPAN
class=362083722-06012011><FONT color=#0000ff> </FONT></SPAN></SPAN></DIV>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA"><SPAN
class=362083722-06012011></SPAN></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA"><SPAN
class=362083722-06012011>Thanks,</SPAN></SPAN></DIV>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA"><SPAN
class=362083722-06012011>Kathy</SPAN></SPAN></DIV>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA"><SPAN
class=362083722-06012011></SPAN></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA"><SPAN
class=362083722-06012011>
<DIV align=left><FONT face=Verdana color=#353535 size=1><STRONG>Kathryn
Ross</STRONG></FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1><STRONG>Statewide
Accounting & Reporting Manager</STRONG></FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1>Oregon State
Controller's Division</FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1>155 Cottage Street NE,
U-50</FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1>Salem, OR
97301</FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1>Phone: (503)
373-7277, ext 253</FONT></DIV>
<DIV align=left><FONT face=Verdana color=#353535 size=1>Fax: (503)
378-3514</FONT></DIV>
<DIV align=left><FONT face=Verdana size=1><A
href="http://oregon.gov/DAS/SCD/SARS">http://oregon.gov/DAS/SCD/SARS</A></FONT></DIV>
<DIV align=left><FONT face=Arial size=2><FONT face=Arial
size=2></FONT></FONT> </DIV>
<DIV align=left>
<DIV align=left><FONT face=Verdana color=#353535 size=1>Data Classification:
Level 1 - Published</FONT></DIV></DIV> </SPAN></SPAN></DIV></BODY></HTML>