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Chapter 2 of the AICPA Industry Audit Guide,, Audits of State and Local Governmental Units, includes accounting guidelines for four categories of interfund transfers. The first category includes transactions that would be treated as revenues or expenditures had they been conducted with outsiders. These transfers are accounted for as revenues of the recipient fund and expenditures of the disbursing fund. The second category includes reimbursements of expenditures made by one fund for another. The reimbursement reduces the expenditures of the recipient fund. The third category includes recurring annual transfers between two or more budgetary funds and shifts resources from a fund legally required to receive revenue to a fund authorized to expend the revenue. These transfers are shown as separate items in each fund's statement of revenues and expenditures or equivalent financial statement. The fourth category includes nonrecurring transfers between funds that are analogous to capital transactions and represent a transfer of equity of the funds Involved. These transfers are treated as direct additions to or deductions from the fund balances of the respective funds. After publication of the Guide, questions arose as to which category covers transfers that are between a general or special revenue fund and an enterprise fund and that subsidize the operations of the recipient fund. Such transfers are similar to those covered by the third category. However, the Guide limits the third category to budgetary funds and enterprise funds are not "budgetary funds. Also, the third category is limited to recurring transfers and the transfers in question may or may not be recurring in nature. The Committee on State and Local Government Accounting believes that the third category should include transfers between funds other than budgetary funds, particularly transfers between a general or special revenue fund and an enterprise fund. Also, the Committee believes that the category should not be restricted to recurring annual transfers.
Finance, Public -- United States -- Accounting; Municipal finance -- Accounting
Accounting | Taxation
American Institute of Certified Public Accountants. Accounting Standards Executive Committee, "Accounting for interfund transfers of state and local government units; Exposure draft (American Institute of Certified Public Accountants), 1977, Jan. 14" (1977). Statements of Position. 371.