Question

Why does a governmental entity need an enterprise fund? Find an example of this type of fund for your city and share the details of that fund.

Answer 1

A government entity needs an enterprise fund so as to be able to account for operations that are financed and operated in a manner that is similar to private business enterprises. An enterprise fund functions as a self-supporting government fund that sells goods and services to the public in exchange for a fee. Fees (charged by the government) and the services (provided by the government in exchange for the fees) are tied together through the enterprise fund. Through the enterprise fund the general public and users of the service can see for themselves the costs incurred by the government for providing particular services. It also helps them to see why the government set fees at a certain level.

An example of enterprise fund for the City of Santa Clarita is The Transit Enterprise Fund of the City of Santa Clarita. The fund provides the following details – statement of net position (this is similar to the balance sheet of a company), statement of revenues, expenses and changes in net position (this is similar to income statement of a company), and statement of cash flows.

It should be noted that The Transit Enterprise Fund of the City of Santa Clarita presents the financial position and results of the bus line services operation in the city.