What is an Internal Service Fund?

An internal service fund is a fund used in governmental accounting to track goods or services shifted between departments on a cost reimbursement basis. This type of fund is used to identify the cost of providing certain goods and services. These funds should only be used for those activities designed to be operated on a break-even basis.

Examples of Internal Service Funds

Here are several examples of internal service funds:

A maintenance services fund is used to provide equipment maintenance services to other departments.
An IT services fund is used to provide IT support, software maintenance, and network infrastructure services to other departments.
A risk management fund is used to provide liability insurance, workers’ compensation, and related services to other departments.
An employee benefits fund manages employee benefits across different government agencies.
A fleet services fund is used to manage the purchase and maintenance of a variety of government vehicles.