According to the GAO, what is a federal definition of special funds?

The federal definition of special funds, as identified by the Government Accountability Office (GAO), refers to funds that are earmarked by law for a specific purpose. This definition highlights that special funds are not available for general expenditures but are designated for particular programs or projects as stipulated by legislation. Such restrictions ensure that the money is used only for the intended purposes, which can include anything from specific public services to infrastructure projects. This structured approach helps maintain accountability in the use of federal resources, aligning financial management with legislative intent and priorities.

Understanding the categorization of special funds is crucial in governmental accounting since they play a vital role in budgetary control and financial reporting, ensuring that funds are allocated appropriately according to federal guidelines.