La. Admin. Code tit. 28 § XLI-505

Current through Register Vol. 50, No. 11, November 20, 2024

Section XLI-505 - Proprietary Funds

A. A Proprietary Fund is used to account for activities that are similar to activities that may be performed by a commercial enterprise. The measurement focus is on the determination of net income, financial position, and changes in financial position and therefore the basis of accounting is full accrual. This measurement focus and basis of accounting, similar to that found in the private sector, is based on the flow of economic resources; it requires the reporting of all assets and liabilities associated with a particular activity, including capital assets and long-term assets and liabilities. Within the proprietary fund category are two fund types.

1. Enterprise Funds-used to account for operations when one or both of the following conditions exist:

a. operations are financed and operated in a manner similar to a private business enterprise, where the intent of management is that the costs (expenses, including depreciation) of providing goods or services to the public on a continuing basis are financed or recovered primarily through user charges;

b. management has decided that the periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.

2. Internal Service Funds-used to account for the financing of goods or services provided by one department or agency to other departments or agencies within the governmental unit, or to other governmental units, on a cost-reimbursement basis. Thus, the objective of an Internal Service Fund is not to make profit, but rather to recover over a period of time the total cost of providing the goods or services. Examples include funds used to account for certain employee benefits, risk management and fleet or facility usage.

La. Admin. Code tit. 28, § XLI-505

Promulgated by the Board of Elementary and Secondary Education, LR 26:463 (March 2000), amended LR 36:1506 (July 2010).

AUTHORITY NOTE: Promulgated in accordance with R.S. 17:6(A)(10).