Which category of fund balance is committed?

The category of fund balance that is considered committed is associated with specific limitations imposed by the government’s decision-making authority, typically through formal board actions or resolutions. This means that once a fund balance is committed, it is intended to be used for a specific purpose, which can only be changed or removed through the same formal process that created the commitment.

In this context, board resolutions signify an official stance taken by the governing body, indicating clear intent regarding the use of financial resources. This contrasts with other categories of fund balance, like unassigned or assigned, which have different criteria for how funds can be utilized. Committed fund balances also reflect higher levels of decision-making oversight compared to other funds that may address operational flexibility or externally imposed restrictions.

For instance, designations for specific projects might imply an intent but lack the same formal, binding nature of a resolution. Similarly, while externally enforceable limitations may affect how a fund operates, the specificity and intentionality of committed funds rise from internal governance rather than external constraints. Therefore, the clarity and authority embodied in board resolutions make this option the correct identification for committed fund balances.