What defines an assigned fund balance?

An assigned fund balance is characterized by resources that have been set aside for a specific commitment or intended future use. This means that while the funds are available for spending, there is a clear intention on the part of the governing body to reserve those funds for a particular purpose, such as funding a future project or covering a planned expense. This is different from unrestricted fund balances, which can be used for any purpose, and restricted fund balances, which are earmarked for specific projects or regulations.

In the context of budgeting and financial reporting, the assignment within the fund balance highlights the prioritization of resources based on management's plans or policies, reinforcing the commitment to using those funds for the intended purpose rather than allowing them to be used freely across various categories.

Understanding assigned fund balances is crucial for stakeholders as it reflects the financial management's strategic planning and how readily available funds will be utilized in the future. This clarity aids in both internal and external assessments of an organization's financial health and planning efficacy.