Definition
Under GASB Statement 34, the general fund is always a major fund. Any other governmental or enterprise fund is major when total assets, liabilities, revenues, or expenditures/expenses of that fund are at least 10% of the corresponding total for all funds of its category (governmental or enterprise) and at least 5% of the corresponding total for all governmental and enterprise funds combined. A government may also report any other fund as major if officials consider it important to users. Nonmajor funds are combined in a single column.
Why it matters in an audit or review
Misapplying the test changes the presentation and the scope of required supplementary information, such as budgetary comparisons for major special revenue funds. Auditors recompute the test from the trial balance each year, since a fund can cross the threshold in one year and fall below it in the next.
Example
Illustrative: governmental fund revenues total $40,000,000 and governmental plus enterprise revenues total $55,000,000. A special revenue fund with $4,400,000 of revenue is 11% of the governmental total and 8% of the combined total, so it passes both tests and is major. If the combined total were $100,000,000 instead, the same fund would be 4.4% of it and would fail the 5% test.
Common mistakes
- Applying only the 10% test.
- Forgetting to recompute the test when funds are added.
Sources
- GASB Statement No. 34, major fund reporting requirements; GASB Codification Section 2200: https://www.gasb.org
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error