Which fund balance classification requires formal action by the government's highest decision-making authority to be established?

• A. Assigned Fund Balance
• B. Restricted Fund Balance
• C. Unassigned Fund Balance
• D. Committed Fund Balance

Answer: (D)

Committed fund balance is the category for which constraints come from the government's highest decision-making authority through formal action. When the governing body passes a resolution or ordinance to set aside resources for a specific purpose, those funds become committed and can only be released or changed by the same formal action. This distinguishes it from other classifications, such as assigned (set by management for intended use), restricted (imposed by external sources like laws or grants), or unassigned (no constraints in the general fund). For example, a city council might formally commit a portion of fund balance for future capital projects, and only another formal action can revise or remove that commitment.