The phrase proceeds of specific revenue sources means that the basis for reporting a special revenue fund in the financial statements is to track a particular source of revenue. A special revenue fund is an account established by a government to collect money that must be used for a specific project. Special Revenue Funds The purpose of special revenue funds is to report money reserved for specific purposes. It usually comes from a tax on citizens, but the funds raised from the tax are either earmarked for a single government project or are directed to a single department. A special revenue fund is a fund used within a government entity to record the proceeds from certain revenue sources for which fund usage is restricted. A special revenue fund is a fund created by a local government that is used specifically for only one purpose. The definitions of the general fund, special revenue fund type, capital projects fund type, debt service fund type, and permanent fund type are clarified by the provisions in this Statement. This fund does not include trust funds, which come under the fiduciary fund. Interpretations of certain terms within the definition of the special revenue fund type have been provided and, for some governments, those interpretations may affect the activities they choose to report in those funds. Yet, some special revenue funds do not report a specific revenue source but rather are intended to present the finances related to particular activity, such as social services. For example, governments sometime use this fund to report federal grants, road work or an emergency fund. Examples of special revenue funds are those used for the funding of parks, libraries, schools, and wastewater management.

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