Fiduciary Activities Robert M. Apple, CPA, MSA

Understanding GASB statement number 84 Fiduciary Activities Understanding GASB statement number 84

Certified continuing professional education class 1-hour credit Must remain for the entirety of the class to receive CPE credit Must sign in and sign out to receive CPE credit Certificates of attendance will be emailed for CPE credit

Fiduciary Activities Who/what are Governmental Accounting Standards Board (GASB) and Generally Accepted Accounting Principles (GAAP)? Criteria for identifying and reporting Descriptions Component unit reporting Recognizing liabilities Effective December, 2018

What is GAAP? Proper accounting Decades of accounting practice No authoritative book

What is GAAP? Does not account for every situation Make the best choice Rule makers leave room for options

What is GAAP? The grey area of materiality Qualitative aspects Quantitative aspects

Who Sets Up GAAP? GASB sets the GAAP rules GASB provides: Accounting principles Interpretations Guidance for implementation

GASB Statement No. 76 Category A Category B GASB Statements GASB Technical Bulletins GASB Implementation Guides American Institute of Certified Public Accountants (AICPA) literature cleared by GASB

GASB Statement No. 76 If not Specified in Category A or B AICPA literature not cleared by the GASB Practices widely practiced by state and local government agencies Literature from professional organizations, regulatory agencies, and authoritative accounting texts

Part 1 Scope and Applicability of This Statement GASB Statement No. 84

Scope and Applicability of This Statement Establishes standards of accounting and financial reporting for fiduciary activities Transactions and other events reported for fiduciary funds requirements unchanged

Part 2 Identifying Fiduciary Activities GASB Statement No. 84

Identifying Fiduciary Activities Primary governments or its component units may be engaged in fiduciary activities Criteria must be met to qualify as a fiduciary activity as we will see

Fiduciary Component Units GASB Statement No. 84

Fiduciary Component Units Meets criteria if one of the following arrangements: Pension plan administered through a trust meeting criteria established in GASB 67 Other postemployment benefit (OPEB) administered through a trust following GASB 73 criteria

Fiduciary Component Units Assets not a part of the reporting entity accumulated for OPEB following criteria in GASB 74 Administered through a trust whereas the government is not a beneficiary Provides benefits to recipients Legally protected from the creditors of the government

Fiduciary Component Units Assets are a benefit of individuals Government does not have admin or direct financial involvement with the assets Benefits the organization or government not part of the financial reporting entity

Fiduciary Component Units Control of assets of the component unit by the primary government is not a factor Not derived from the government’s provision of goods or services to those individuals, organizations or other governments

Pension and OPEB Arrangements That are not Component Units GASB Statement No. 84

Pension and OPEB Arrangements That are not Component Units Non component unit pension and OPEB’s are fiduciary activities if controlled by the government Pension plans administered through a trust (GASB 67) OPEB plan administered through a trust (GASB 74)

Pension and OPEB Arrangements That are not Component Units Assets not part of the reporting entity accumulated for a pension (GASB 73) Assets from entities not a part of the reporting entity accumulated for OPEB (GASB 74)

Other Fiduciary Activities GASB Statement No. 84

Other Fiduciary Activities Activities not addressed previously must meet the following criteria: Assets associated with the activity controlled by the government

Other Fiduciary Activities Assets associated with the activity are not derived either: Solely from the government’s own-source revenues or Government-mandated or voluntary nonexchange transactions except pass-through grants not administrated or financially involved in

Other Fiduciary Activities Assets have one or more of the following characteristics: Assets administered through a trust and the government is not a beneficiary Dedicated to providing benefits to recipients Legally protected from the creditors of the government

Other Fiduciary Activities Assets are for the benefit of individuals or organizations Government does not have admin or direct financial involvement with the assets Assets not derived from the government’s provision of goods or services to those individuals or organizations

Control of Assets GASB Statement No. 84

Control of Assets A government controls the assets of an activity if: Holds the assets Ability to direct the use, exchange, or employment of assets

Own-Source Revenues GASB Statement No. 84

Own-Source Revenues Revenues generated by a government itself Exchange and exchange-like revenues (water and sewer charges) Investment earnings

Own-Source Revenues Imposed nonexchange revenues like property taxes Derived tax revenues like sales and income taxes

Part 3 Reporting Fiduciary Activities in Fiduciary Funds GASB Statement No. 84

Reporting Fiduciary Activities in Fiduciary Funds Report the fiduciary activities in the fiduciary financial statements of the basic financial statements Must meet the previously discussed requirements

Reporting Fiduciary Activities in Fiduciary Funds Pensions and OPEB meeting criteria Investment trust funds reporting external portion of investment pools and individual investment accounts Private-purpose funds that are not pensions and OPEB

Reporting Fiduciary Activities in Fiduciary Funds Custodial funds not held in trusts Business-type activity assets and liabilities held for three months or less Separately report additions and deductions in the operating activities category of its statement of cash flows

Part 4 Statement of Fiduciary Net Position GASB Statement No. 84

Statement of Fiduciary Net Position Reports: Assets Deferred outflows of resources Liabilities Deferred inflows of resources Fiduciary net position of pension trust funds Investment trust funds Private-purpose trust funds Custodial funds

Statement of Fiduciary Net Position Liabilities such as taxes collected for other governments are recognized in the fiduciary fund Report pension and OPEB trust fund information derived from previous slide’s Report’s list

Part 5 Statement of Changes in Fiduciary Net Position GASB Statement No. 84

Statement of Changes in Fiduciary Net Position Reports additions and deductions from: Pension trust funds Investment trust funds Private-purpose trust funds Custodial funds

Statement of Changes in Fiduciary Net Position Separately display: Investment earnings Investment costs Net investment earnings Can report custodial funds held for three months or less as a single aggregate

Part 6 Reporting Fiduciary Component Units GASB Statement No. 84

Reporting Fiduciary Component Units Includes the combined information of its own component units that are fiduciary component units Aggregated with the primary government’s fiduciary funds

Closure Enhances consistency and comparability by: Establishing criteria for identifying fiduciary activities Clarifying whether and how business-type activities should report their fiduciary activities

Questions? GASB Statement No. 84