To improve guidance for state and local government fiduciary funds reporting, the Government Accounting Standards Board (GASB) issued Statement No. 84, Fiduciary Activities in January 2017. That statement is effective for all fiscal years beginning after December 15, 2018, so cities, schools, counties and other entities should be implementing the changes now, if they haven’t already.
What Is a Fiduciary Activity?
For public entities, an activity is considered “fiduciary” when a government oversees assets that belong to individuals or others outside of the entity. Previously, information on identifying and reporting these items was found primarily in GASB Statements 14 and 34 and NCGA Statement 1. Because the definition of a fiduciary activity is so broad, GASB has released an implementation guide answering some common questions to help entities determine what activities qualify.
Once your entity has determined a specific activity is fiduciary, then you must determine the fund type. GASB 84 defines four types:
- Pension and other employee benefit trust funds
- Investment trust funds
- Private-purpose trust funds
- Custodial funds
When to Report Assets
Statement No. 84 was developed to improve consistency and comparability by clarifying the specific criteria for identifying and reporting fiduciary activities. It includes four paths for determining when a government should report assets in a fiduciary fund, each depending upon various factors such as:
- Whether the assets are held by a component unit
- Whether the assets are held for a pension or other postemployment benefits (OPEB) arrangement
- Whether the government controls the assets
- Whether the government has administrative or direct financial involvement
What Has Changed?
Under GASB 84, the specific changes in reporting for each entity will depend upon numerous factors. For example, counties and similar agencies sometimes report collections that include a fee retained in a fiduciary fund; GASB 84 may require that these entities break out such fees (considered own-source revenues) and report them in a governmental fund. For other entities, such as school districts, this statement means that some agency funds will not only have their titles changed to custodial funds, but the district will be required to report fund activity in a statement of changes in fiduciary net position for the first time.
Changes may go both ways. Activities that were previously reported as fiduciary may no longer meet the definition; conversely, others that have been governmental or business-type may now be considered fiduciary. Because such changes could have considerable impact, entities should not wait for the end of the year before planning the GASB No. 84 implementation. The time to plan is now.
To understand any possible changes, reporting entities should view the recently released implementation guide from GASB. It contains key reporting assistance that clarifies, explains or elaborates on the requirements of Statement No. 84, including areas such as control of assets; own-source revenues; assets for the benefit of individuals, organizations and other governments; and reporting fiduciary activities in investment trust funds, private-purpose trust funds and custodial funds. For this assistance and information on implementation, download the complete Implementation Guide No. 2019-2, Fiduciary Activities.
Wondering how to guide your organization’s implementation of GASB 84? Weaver is offering a free webinar on Wednesday, October 16th, to take a deep dive into the new standard. We will lead you through the nuts and bolts so that you will understand how to identify fiduciary activities and how to report them. We will also walk through several examples to help you master the changes.
There’s no cost for this one-hour online course — register here today to reserve your space.
We invite you and your colleagues to join us on Wednesday…