Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

Non-spendable fund balance refers to resources that cannot be spent because they are either in a form that is not liquid or they are required to remain intact. For example, this could include inventories, prepayments, or other assets that are not readily convertible to cash. It reflects the idea that certain resources are inherently limited in their availability for future spending, thereby ensuring that these funds remain safeguarded for specific purposes or obligations.

In contrast, restricted fund balances are those with constraints imposed either externally by creditors, grantors, or laws, whereas committed fund balances are those that are set aside for specific purposes with a formal action by the government's highest decision-making authority. Designated fund balances can be set aside at the discretion of management for future use but do not have the same legal requirements or limitations as non-spendable resources. Thus, the unique characteristic of non-spendable fund balance lies in its inability to be utilized for current spending due to its nature or legal constraints.