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If You Report Fiduciary Funds, Expect Some Changes

CPAs & Advisors

Jamie Rivette
Jamie Rivette CPA, CGFM Principal CPAs & Advisors

The Governmental Accounting Standards Board (GASB) has released Statement No. 84 Fiduciary Activities. The majority of governmental financial statements include fiduciary funds which typically include tax funds, pension trust funds, and other employee benefit trust funds. The objective of this statement is to clarify the identification of fiduciary activities and how those activities should be reported.

The statement focuses on two criteria:

1) Is the government controlling the assets of the fiduciary activity?

2) Who are the beneficiaries with whom fiduciary relationships exist?

Additional criteria identify fiduciary component units and post-employment benefit arrangements that are fiduciary activities. What does this mean for your government? If your government has an activity that meets the criteria, then you will report a fiduciary fund in the basic financial statements.

  • Governments will present a statement of fiduciary net position and a statement of changes in net fiduciary position. The statement of changes in fiduciary net position is a new, required statement for all fiduciary activities. Previously, it was only required for governments that reported a trust fund.
  • Instead of recording an asset with a corresponding liability, governments will now need to account for the fiduciary activity like a special revenue fund that includes additions and deductions.

The statement specifies four fiduciary funds that should be reported: 1) pension (and other employee benefit) trust funds, 2) investment trust funds, 3) private-purpose trust funds, and 4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets the specific criteria.

Unlike the previous GASB statements that have been released in the past couple of years, this statement will change the majority of governmental financial statements. It is important to know the effective date of this statement so that you have time to plan and set up new chart of account numbers to start the year of implementation on the right foot. This statement is effective for reporting periods beginning after December 15, 2018.

If you have questions or need assistance, contact Yeo & Yeo.

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