Louisiana Administrative Code
Title 28 - EDUCATION
Part XLI - Bulletin 1929-Louisiana Accounting and Uniform Governmental Handbook
Chapter 5 - Fund Classifications
Section XLI-501 - Explanation/General Information/Introduction/Overview

A. Governmental accounting systems should be organized and operated on a fund basis. Unlike a private business, which is accounted for as a single entity, a governmental unit is accounted for through separate funds, each accounting for designated assets, liabilities and fund or other balances. Therefore, from an accounting and financial management viewpoint, a governmental unit is a combination of several distinctively different fiscal and accounting entities, each having a separate set of self-balancing accounts and functioning independently of other funds. Each fund must be so accounted for that the identity of its resources, obligations, revenues, expenditures, and fund balances is continually maintained.

B. The various activities of a government are not typically considered to form a homogeneous whole. Instead, a governmental entity is considered to comprise a number of separate fiscal entities known as "funds." Such funds are established to segregate specific activities or objectives of a government in accordance with special regulations, restrictions, or limitations. Thus, in governmental accounting, the accounting entity is each individual fund, not the overall government organization.

C. Funds used by governmental entities are classified into three broad categories: governmental, proprietary, and fiduciary.