On January 31, 2017, the Governmental Accounting Standards Board (GASB) issued guidance for state and local governments regarding what constitutes fiduciary activities for financial reporting purposes, how fiduciary activities should be reported and when liabilities to beneficiaries should be recognized. Governments currently are required to report fiduciary activities in fiduciary fund financial statements, however, existing standards are not explicit about what constitutes a fiduciary activity for financial reporting purposes. To remedy the diversity in practice with regard to identifying and reporting fiduciary activities, GASB Statement 84, Fiduciary Activities, establishes criteria for identifying fiduciary activities of all state and local governments.
The criteria in Statement 84 generally focus on:
- Whether a government is controlling the assets of the fiduciary activity
- The beneficiaries with whom a fiduciary relationship exists
Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities.
An activity meeting the criteria in Statement 84 should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position. An exception to that requirement is provided for a business-type activity that normally expects to hold custodial assets for three months or less.
Statement 84 describes four types of fiduciary funds that should be reported, if applicable. The Statement clarifies the definitions of the three existing fiduciary funds associated with trusts that meet specific criteria:
- Pension (and other employee benefit) trust funds
- Investment trust funds
- Private-purpose trust funds
- Custodial funds
Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should combine its information with its component units that are fiduciary component units and aggregate that combined information with the primary government’s fiduciary funds.
Statement 84 also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. Events that compel a government to disburse fiduciary resources occur when a demand for the resources has been made or when no further action, approval or condition is required to be taken or met by the beneficiary to release the assets.
Effective Date and Transition
The requirements of Statement 84 are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.
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