P&N is now EisnerAmper

Effective May 21, 2023, P&N has joined EisnerAmper. Read the full announcement here.

Assurance Services • Published 2/19/2020 Redefining Fiduciary Activities with GASB 84
SHARE THIS

 

In January 2017, the Governmental Accounting Standards Board (GASB) issued Statement No. 84 – Fiduciary Activities (“GASB 84” or "the standard"). GASB 84 is effective for fiscal years beginning after December 15, 2018. This standard establishes criteria for identifying fiduciary activities and reporting on those activities. Because of the wide-reaching nature of GASB 84, it is critical to develop a plan now to identify potential fiduciary activities and how to account for those activities.

GASB 84 describes four fiduciary fund types:

  • Pension (and other employee benefit) trust funds
  • Investment trust funds
  • Private-purpose trust funds
  • Custodial funds (previously "agency funds")

The standard also requires custodial funds to present a statement of net position and a statement of changes (flows statement) and defines the manner in which liabilities of the funds are measured. Unlike agency funds, custodial funds may have a “net position,” since assets may not equal liabilities.

What does this mean for my organization’s financial and budget reporting?

While the impact of GASB 84 may vary from one organization to another, there are several key aspects that could significantly affect your accounting, reporting, and budgets in the near future.

Since the standard is already effective, it's crucial to act upon any necessary changes as soon as possible.

  • Activities that were traditionally considered fiduciary in nature may no longer be accounted for and reported as a fiduciary fund. Instead, they could be considered governmental or proprietary funds.
  • Activities that were previously governmental or proprietary may now be considered fiduciary.
  • Activities previously excluded from the financial statements altogether may need to be reported moving forward.

It’s important to identify the types of funds or activities within your organization that could be considered fiduciary in nature. Consider the following:

  • Do you maintain a defined benefit or defined contribution pension plan?
  • Does your organization offer post-employment benefit plans for other entities?
  • Are there assets held or collected by your organization for the benefit of other organizations or individuals?
  • What is your organization’s level of administrative or financial involvement in potential fiduciary activities?

Once the activities are identified, GASB provides a multi-step process for determining whether the activity is fiduciary or not. For those items determined to be fiduciary in nature, consideration must be given to internal controls, accounting and reporting. Ask the following:

  • Are there sufficient internal controls over the initiation, processing, recording, and reporting of the fiduciary activities?
  • Are there adequate accounting records to document the balances in the respective accounts as well as the activity flowing through the funds?

Depending on the types and number of potential fiduciary activities, the above process could take some time to address. The standard is already effective, it's crucial to act upon any necessary changes as soon as possible.

How can P&N help?

While fiduciary activities are not a new concept, GASB 84 has many possible impacts. Our team can help by:

  • Reviewing activities within your organization which could be considered fiduciary in nature;
  • Walking you through the guidance provided under the accounting standard to make a final determination of whether the activity is fiduciary;
  • Providing recommendations for best practices/internal controls over the fiduciary activities; and
  • Assisting with recommendations and training on how to properly account for and report fiduciary activities.

Contact us today to start a discussion about how GASB 84 may impact your organization.

Scroll to Top