Definition
An accounting approach that separates money into distinct funds — like operating and reserves — so each is tracked on its own.
Fund accounting tracks the association's money in separate "funds" according to purpose — most commonly an operating fund and a reserve fund. Each fund has its own balances and activity.
This separation keeps reserve money clearly distinct from operating cash, so the board can see at a glance whether reserves are intact and being used only for their intended purpose. It's a standard and recommended practice for community associations.