What is required for resources in a special revenue fund to be reported as restricted net assets?

To have resources in a special revenue fund reported as restricted net assets, it is essential that there are explicit legal, contractual, or donor-imposed limitations on how those resources can be used. Simply being classified within a special revenue fund does not automatically categorize the resources as restricted.

The criteria for restricted net assets dictate that such resources must have specific earmarks or constraints that dictate their use. This could include legal restrictions or other strong evidence that showcases the intended purpose of the funds. While special revenue funds are designated for specific governmental functions, without these additional restrictions imposed legally or through donors, the funds do not meet the definition of restricted net assets.

This ensures that stakeholders can differentiate between various fund types based on the limitations imposed upon the use of those resources, aligning with proper public sector accounting practices. The distinction highlights that merely having a special revenue fund and reporting it as such does not suffice; there must be definitive evidence of restricted use to classify the assets accordingly.