1. GASB No. 84 Fiduciary Activities
Nature Coast Chapter FGFOA
April 17, 2019
Mark A. White, CPA, Audit Partner
Purvis Gray & Company, CPA’s
Tallahassee, Gainesville, Ocala, Orlando, Sarasota

2. Credits - From Other Presentations
David Bean, GASB
Carol Patridge, Yeo & Yeo
Stephen Blann, Rehmann
Chester Moyer, Rubin Brown

3. Issues For Fiduciary Activities Now
Paragraph 138 of Statement 34 provides, “Governments engaged only in business-type activities should present only the financial statements required for enterprise funds” ― Concerns about how governments engaged only in business-type activities should report their fiduciary activities.
Paragraph 143 2c(3) of NCGA Statement 1 requires governments to include a combining statement of changes in assets and liabilities for all agency funds in a CAFR. Paragraph 110 of Statement 34,as amended, requires only the reporting of a statement of net position for agency funds in the basic financial statements ― Perceived need by users for a flows statement for agency funds

4. GASB No. 84 Fiduciary Activities
Summary
Issued January 2017
Effective for years beginning after 12/15/18, earlier application encouraged
Establishes criteria for identifying fiduciary activities
Some changes to financial statements (no more Agency Fund formats)

5. GASB No. 84 Fiduciary Activities
Summary
Changes to conform to the provisions should be applied retroactively by restating financial statements, if practicable, for all prior periods presented
If not practicable, the cumulative effect, if any, of applying the provisions should be reported as a restatement of beginning net position (or fund balance or fund net position, as applicable) for the earliest period restated.
In first period that this Statement is applied, the notes to the financial statements should disclose the nature of the restatement and its effect.
The reason for not restating prior periods presented should be disclosed

6. GASB Statement 84 Fiduciary Activities
When to report an asset in a Fiduciary Fund ? 4 Paths to This Determination
Component units that provide postemployment benefits
Component units that do not provide postemployment benefits
Postemployment benefit arrangements that are not component units
All other activities

7. GASB No. 84 Fiduciary Activities
Fiduciary component units (GASB 14/39)
Legally separate entity
Primary government is financially accountable:
Appoints a voting majority and can impose its will; or
Appoints a voting majority and financial benefit/burden; or
Fiscally dependent and financial benefit/burden

8. GASB No. 84 Fiduciary Activities
Pension/OPEB plans administered through qualifying trusts (paragraph 3 of No.’s 67 & 74):
Contributions are irrevocable
Plan assets are dedicated to providing benefits
Plan assets are legally protected from creditors
Generally, pension and OPEB plans administered through a trust are considered legally separate entities.
The primary government is considered to have a financial burden if it makes contributions to the pension or OPEB plan

9. GASB No. 84 Fiduciary Activities
Other component units are fiduciary activities if they have one of the following characteristics:
Assets are administered through a trust
Government itself is not the beneficiary
Assets are dedicated to providing benefits
Assets are legally protected from creditors

10. GASB No. 84 Fiduciary Activities
Other component units are fiduciary activities if they have one of the following characteristics:
2. Assets are for the benefit of individuals
Government does not have administrative or direct financial involvement with the assets
Assets are not derived from the government’s provision of goods or services to those individuals

11. GASB No. 84 Fiduciary Activities
Other component units are fiduciary activities if they have one of the following characteristics:
3. Assets are for the benefit of organizations or other governments
Beneficiary is not part of the reporting entity
Assets are not derived from the government’s provision of goods or services to those organizations or other governments

12. GASB No. 84 Fiduciary Activities
If not a component unit, a pension/OPEB plan is a fiduciary activity if:
Administered through a trust (or accumulated for
pension/OPEB benefits of other governments); and
The government CONTROLS the assets
Holds the assets; or
Has the ability to direct the use, exchange, or employment of the assets

13. GASB No. 84 Fiduciary Activities
Three criteria for other fiduciary activities
The assets are CONTROLED by (held by, or able to have their use directed by) the government
The assets are not derived from the government’s own-source revenue or government-mandated/voluntary non-exchange transactions

14. GASB No. 84 Fiduciary Activities
Three criteria for other fiduciary activities
3. The assets are either;
Held in a qualifying trust
Held for the benefit of individuals without the government having Administrative or Direct Financial Involvement
Held for the benefit of outside organization not part of the reporting entity

15. GASB No. 84 Fiduciary Activities
Definitions;
CONTROL – a government controls the assets of an activity if it holds the assets or has the ability to direct their use (even if that ability is outsourced to a third-party)
ADMINISTRATIVE INVOLVEMENT is defined by example, and includes monitoring compliance, determining eligibility, and has the ability to exercise discretion in how funds are allocated

16. GABS No. 84 Fiduciary Activities
Definitions
DIRECT FINANCIAL INVOLVEMENT is defined by example, and includes providing matching dollars or being liable for disallowed costs
OWN SOURCED REVENUES– revenues that are generated by a government itself such as taxes, charges for services, and investment earnings

17. GASB No. 84 Fiduciary Activities
If Not Fiduciary Activities, Then What?
Many activities previously reported in fiduciary funds may end up in governmental/proprietary funds
They may still be liabilities… but they may not be FIDUCIARY ACTIVITIES, and therefore both the assets and liabilities should appear on the government- wide financial statements

18. GASB No. 84 Fiduciary Activities
Four Types Of Fiduciary Funds Identified;
Pension (and other employee benefit) trust funds
Investment trust funds
Private-purpose trust funds
Custodial funds (replace agency)

19. Types of Fiduciary Funds
Pension (and other employee benefit) trust funds are used to report fiduciary activities for the following:
Pension plans and OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement 67 or paragraph 3 of Statement 74, respectively
Other employee benefit plans for which (1) assets are held in a trust in which the government itself is not a beneficiary, the assets are dedicated to providing benefits to recipients in accordance with the benefit terms, and are legally protected from the creditors of the government and (2) contributions to the trust and earnings on those contributions are irrevocable.
Investment trust funds are used to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in a trust that meets the specific criteria (dedicated and protected).

20. Types of Fiduciary Funds
3. Private-purpose trust funds are used to report all fiduciary activities that:
Are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds and
Are held in a trust that meets the specific criteria (dedicated and protected).
4. Custodial funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

21. GASB No. 84 Fiduciary Activities
Financial Statements
Statement of Fiduciary Net Position
Statement of Changes in Fiduciary Net Position
No more Agency Fund format

22. GASB No. 84 Fiduciary Activities
Statement of Fiduciary Net Position
Reports the assets, deferred outflows, liabilities, deferred inflows, and fiduciary net position of fiduciary funds
Investments and receivables broken down by type

23. GASB No. 84 Fiduciary Activities
Statement of Fiduciary Net Position
Pension (and other employee benefit) trust funds
follow GASB 67/74
All others, recognize liability to beneficiaries when an event has occurred that compels the government to disburse fiduciary resources

24. GASB No. 84 Fiduciary Activities
Statement of Changes in Fiduciary Net Position
Reports additions to and deductions from fiduciary
funds
Disaggregate and present by source:
Investment earnings
Investment costs
Net investment earnings
Custodial funds may report a single aggregated amount for additions and a single aggregated amount for deductions if typically held for three months or less

27. School District Internal Accounts
A school district maintains funds raised by and belonging to various student groups & clubs, formerly reported as Agency Fund
Do Faculty advisors/Sponsors constitute administrative involvement?

28. School District – Internal Accounts
Assets held by legally separate component unit? – No
Does the government control the assets? – Yes
Are the assets held for pension/OPEB? – No
Assets derived from own source revenue? – No
Assets derived from non-exchange transactions? – No
Assets held in trust and gov. not beneficiary? – No
Administrative or direct financial involvement? – Yes
Assets for others outside reporting entity? – No
Not a Fiduciary Activity? Most Likely a SRF? Needs to be Budgeted?