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Trust and Agency (Fiduciary) Funds Summary of Interfund–GCA–GLTL Accounting. Chapter 12. Understand & discuss the circumstances when funds are used Define and distinguish among the four types of funds Prepare basic journal entries. Prepare Agency Fund financial statements

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Trust and Agency (Fiduciary) Funds Summary of Interfund–GCA–GLTL Accounting


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trust and agency fiduciary funds summary of interfund gca gltl accounting

Trust and Agency(Fiduciary) FundsSummary of Interfund–GCA–GLTL Accounting

Chapter 12

learning objectives
Understand & discuss the circumstances when funds are used

Define and distinguish among the four types of funds

Prepare basic journal entries

Prepare Agency Fund financial statements

Prepare Trust Fund financial statements

Account for common transactions affecting more than one fund and GCA and GLTL accounts

Learning Objectives
fiduciary funds used when
Fiduciary Funds used when

. . . government holds resources in a trust or agency capacity for the benefit of others.

funds held in fiduciary capacity for
Funds held in fiduciary capacity for
  • Government or its programs – endowment to finance research program or maintain recreational area
  • Others, including individuals, other governments, or private organizations
examples of external fiduciary relationships
Examples of external fiduciary relationships
  • Pension plans
  • External investment pools
  • Endowments to finance scholarships for residents of government
  • Taxes, insurance premiums, & dues withheld from employees pay to be transferred to others
  • Taxes collected for other governments
may use other funds to account for fiduciary relationships
May use other funds to account for fiduciary relationships
  • Special Revenue Fund – resources available for expenditures
  • Permanent Fund – maintenance of principal required
  • Enterprise Fund – special business-type activities
accountability focus
Accountability Focus
  • On the government’s fulfillment of its fiduciary responsibilities during a specified period and on remaining responsibilities at the end of the period
  • Difference in assets and liabilities typically called “Net Assets Held in Trust”
agency funds
Agency Funds
  • Conduit or clearinghouse funds established to account for assets received for and paid to other funds, individuals, or organizations
  • Only used for assets held for the benefit of others
allowable uses of agency funds
Allowable uses of Agency Funds
  • “Pure” pass-through grants – government serves only as a cash conduit (use of AF mandated by GASB)
  • Payroll deduction collection & payments
  • Imprest checking account
    • Receipts must be allocated among several funds
    • Single expenditure financed by several funds
tax agency funds taf
Tax Agency Funds (TAF)
  • Used to combine tax levies from multiple governments in same geographic area
  • Practice avoids duplicating assessment and collection processes
functions of taf
Functions of TAF
  • Governments continue to maintain own tax records.
  • Assessments turned over to TAF for collection
  • TAF sends out bills to taxpayers
  • Collections made by TAF
  • Collections distributed to participating governments, less collection fee that goes to government administering the TAF
taf financial statements
TAF Financial Statements
  • Statements of Net Assets [Page 478] – does not include cash balance of TAF since money belongs to the administering government
  • Statement of Changes in Assets & Liabilities [Page 478]
    • Not an operating statement
    • Only reports changes in assets & liabilities
special assessment agency funds
Special Assessment Agency Funds
  • Used when government is not obligated in any manner on debt issued to finance a special assessment
  • Debt is not accounted for by government, but asset will be in GCA list
  • Government is debt service agent
    • Collects assessments from property owners
    • Makes payments to debt holders
types of trust funds
Types of Trust Funds
  • Pension (or Other Postemployment Benefit) Trust Funds
  • Investment Trust Funds
  • Private Purpose Trust Funds
private purpose trust fund
Private Purpose Trust Fund
  • Not common in governments
  • May be either
    • Expendable – principal and earnings may be spent
    • Nonexpendable – principal must be maintained but earnings may be expendable or nonexpendable
financial statements page 482
Financial Statements [Page 482]
  • Statement of Net Assets
  • Statement of Changes in Net Assets
investment trust funds
Investment Trust Funds
  • Used when government invests its own money as well as funds from other governments
  • Only money of other governments reported in this fund – government’s own money must reported in the funds
  • Additions are amounts invested by participating governments & investment income
  • Deductions are withdrawals and investment expenses incurred
pension trusts
Pension Trusts
  • Fastest growing funds of most governments
  • Occasionally run at state level for participating governments
  • Retirement System of Alabama (RSA) maintains funds for State employees and most county and municipal governments – making it a PERS
plans classified as
Plans classified as
  • Single-employer plans – only one government’s employees in plan
  • Multiple-employer plans – employees of many governments are participating – may be either
    • Agent – multiple single-employer plans combined into single operation
    • Cost-sharing – one large plan
pension accounting standards
Pension Accounting Standards
  • GASB #25 – Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans
  • GASB #27 – Accounting for Pensions by State and Local Governmental Employers
opeb accounting standards
OPEB Accounting Standards
  • GASB #43 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
  • GASB #45 – Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions
primary accounting reporting requirements
Primary Accounting & Reporting Requirements
  • Financial Statements
    • Statement of Plan Net Assets
    • Statement of Changes in Plan Net Assets
  • Statement of Changes in Plan Net Assets reports additions & deductions
  • Investments reported at fair value
  • Capital assets reported at historical cost and depreciated
primary accounting reporting requirements continued
Primary Accounting & Reporting Requirements (continued)
  • Actuarial information not in statements but in Required Supplementary Information (RSI)
  • Parameters established for actuarially determined information
  • Standardized pension benefit obligation measurement not required – several options are available
pension reporting
Pension Reporting
  • Financial Statements [Page 488]
    • Statement of Plan Net Assets
    • Statement of Changes in Plan Net Assets
  • RSI [Page 489]
    • Schedule of Funding Progress
    • Schedule of Employer Contributions
employer fund reporting annual pension costs
Employer Fund Reporting:Annual Pension Costs
  • Cost-sharing plan – amount determined by the plan
  • Single-employer (or agent) plan
    • Measured as employer’s actuarial determined annual required contribution (ARC)
    • Adjusted for interest on beginning net pension obligation (NPO)
    • Adjusted for actuarial amortization from past contribution deficiencies or excess contributions