Project Pages

Fiduciary Activities

Project Description: The primary objective of this project is to develop guidance regarding whether and how governments should report fiduciary activities in their general purpose external financial reports. Other objectives of this project include assessing whether additional guidance should be developed (1) to clarify the difference between a private-purpose trust fund and an agency fund, (2) to clarify whether a business-type activity engaging in fiduciary activities should present fiduciary fund financial statements, and (3) to consider requiring a combining statement of changes in assets and liabilities for agency funds.

Status:
Exposure Draft approved: December 2015
Preliminary Views approved: November 2014
Added to Current Agenda: August 2013
Added to Research Agenda: April 2010

Fiduciary Activities—Project Plan

Background: The process of implementing GASB Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State and Local Governmental Employers (issued in November 1994) triggered numerous technical inquiries as to whether an employer should report a particular pension plan as a pension trust fund.   Existing standards did not provide a basis for a clear answer to those questions.  Moreover, staff became aware that, in the absence of authoritative guidance, preparers and auditors have tended to interpret government’s fiduciary responsibility in a variety of ways, ranging from very broadly to more narrowly (for example, focusing on custody of the trust assets).

During the deliberations that led to the issuance of Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, in October 1997, the Board recognized that the definition of fiduciary funds provided in NCGA Statement 1, as amended, and the fiduciary responsibility provisions in Statement 14, paragraph 19, may not be sufficiently descriptive to assist all governments in determining if a potential fiduciary activity should be reported as a trust or agency fund.  The Board identified administrative involvement and investment functions as two possible characteristics of fiduciary responsibility in this situation.  However, because modifying fund reporting requirements was beyond the scope of that project, the nonauthoritative guidance was presented in the Basis for Conclusions.

Issues regarding whether, or in what way, fiduciary activities should be included in employers’ financial reports also arose during the development of the financial reporting model promulgated in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments.  In Statement 34, the Board distinguished between (a) governmental and proprietary funds, which can be used to support the government’s programs or other services, and (b) fiduciary funds, which are held in a trustee or agent capacity for others.   Statement 34 excludes fiduciary activities from the government-wide financial statements, because they cannot be used to support the government’s programs and services, but requires that fiduciary funds and component units be reported in fund financial statements, in view of the government’s stewardship responsibility for them.

Technical inquiries concerning financial reporting for fiduciary activities continue to come to the staff. For example, questions have arisen regarding reporting of state prepaid tuition plans (Internal Revenue Code Section 529 Savings Plans), which have grown in popularity and dollar significance over the past decade.   

Accounting and Financial Reporting Issues:

This project considers whether additional guidance should be developed for determining whether and how a government should report a fiduciary activity and whether additional guidance should be developed to:
  1. Clarify the difference between a private-purpose trust fund and an agency fund
  2. Clarify whether a business-type activity engaging in fiduciary activities should present fiduciary fund financial statements
  3. Consider requiring a combining statement of changes in assets and liabilities for agency funds

Project History:

  • Pre-agenda research approved: April 2010
  • Added to current technical agenda: August 2013
  • Task force established? Yes
  • Deliberations began: September 2013
  • Preliminary Views approved: November 2014
  • Comment period: November 2014–March 2015
  • Field test completed: March 2015 (results reviewed in April 2015)
  • Public hearings held: April 2015
  • Redeliberations began: June 2015
  • Task force meeting held: October 2015
  • Exposure Draft issued: December 2015
  • Comment period: December 2015–March 2016
  • Public hearing held: April 2016
  • Redeliberations began: May 2016
Current Developments: In May through August 2016, the Board redeliberated the Exposure Draft, Fiduciary Activities, by considering feedback from respondents to the Exposure Draft, as well as testifiers at a public hearing. At the May 2016 meeting, the Board discussed comments related to the scope and applicability of the proposed Statement. At the June 2016 meeting, the Board discussed comments on the proposals related to the control criteria, the definition of own-source revenue, and the four fiduciary criteria. At the August 2016 meeting, the Board discussed comments on the proposals related to the identification of fiduciary activities and related reporting of pension and other postemployment benefit plans and component units. The Board also discussed comments on the proposals related to the four types of fiduciary funds.

Work Plan:

 Board Meetings Topics to be considered

September 2016:

Redeliberate reporting of fiduciary activities. Redeliberate Statement of Fiduciary Net Position; Statement of Changes in Fiduciary Net Position; and effective date and transition.

December 2016:

Review preballot draft of final Statement.

December 2016 (T/C): Review ballot draft and consider a final Statement for approval.

Fiduciary Activities—RECENT MINUTES


Minutes of Meetings, August 10-12, 2016

The Board continued redeliberations of the Exposure Draft, Fiduciary Activities, by discussing tentative decisions and follow-up items from the June 2016 meeting as well as feedback received regarding (1) identification and reporting of fiduciary component units of fiduciary component units and (2) reporting fiduciary activities in fiduciary funds.

First, in regard to tentative decisions and follow-up items from the June 2016 meeting, the Board discussed presentation of external investment pools in fiduciary fund financial statements. The Board tentatively decided that the final Statement should retain the concept of reporting fiduciary activities based on the presence or absence of a trust agreement or equivalent arrangement. Governments should report external investment pools using two columns: (1) investment trust funds for those pools held in a trust agreement or equivalent arrangement and (2) custodial funds for those pools not held in a trust agreement or equivalent arrangement (in a sub-category titled external investment pool under the custodial fund heading).

The Board then discussed whether paragraph 5 of the Exposure Draft should be amended in the final Statement to provide that Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, paragraph 18, as amended, be further amended to provide that external investment pools should be reported in a fiduciary fund based on the final Statement. The Board tentatively agreed that Statement 31, paragraph 18, should be amended in the final Statement by changing the reference from external investment pools to fund classification guidance in this Statement.

Next, the Board discussed whether the term use should be retained in the context of defining what is meant by direct in the control criteria. The Board also discussed whether or not use should be defined as, “when a government expends or consumes an asset for the benefit of individuals, organizations, or other governments, outside of the government’s provision of services to them.” The Board tentatively agreed to both of the aforementioned.

The Board then discussed criteria 7b in the Exposure Draft: “The assets are for the benefit of individuals that are not required to be residents or recipients of the government’s goods and services as a condition of being a beneficiary. In addition, the assets are not derived from the government’s provision of goods or services to those individuals.” To clarify this criteria, the Board tentatively decided that criteria 7b should be amended in the final Statement to include the concept that the use of the assets is not substantively approved by the government.

Next, the Board considered whether the final Statement should include additional language to clarify that a primary government should not consider whether it controls the assets of its fiduciary component units when determining whether or not the activity is fiduciary in nature. The Board tentatively decided that additional clarifying language should be included.

Next, the Board discussed whether paragraph 23 of the Exposure Draft (which proposed that when reported in the fiduciary fund financial statements of a primary government, fiduciary component units include the financial information from their own fiduciary component units) should be carried forward to the final Statement. The Board tentatively decided to carry forward paragraph 23 and that further explanation should be added to the Basis for Conclusions related to (1) component units that are fiduciary in nature, including their fiduciary component units, rolling up to the primary government’s fiduciary fund financial statement and (2) the presentation of fiduciary activities of discretely presented component units that are not fiduciary in nature.

The Board then considered the fund classifications proposed in paragraphs 12, 14, and 15 of the Exposure Draft discussing pension trust funds, private-purpose trust funds, and custodial funds. The Board tentatively decided paragraphs 12, 14, and 15 should be carried forward to the final Statement.

Lastly, the Board discussed potential clarifications conveying that the requirements of the final Statement apply to stand-alone business-type activities (BTAs). The Board tentatively decided that additional language should be added to the Basis for Conclusions in the final Statement that specifically addresses the provision that requires the application of these standards to stand-alone BTAs.

Minutes of Meetings, June 22-23, 2016

The Board continued redeliberations of the Exposure Draft, Fiduciary Activities, by discussing the feedback received regarding the identification of fiduciary activities.

First, the Board discussed the control criteria provided in paragraphs 7 and 10 of the Exposure Draft. To clarify how a government could control assets of an activity when it is not holding the assets, the Board tentatively decided to remove the term administer and carry forward the term direct from the criteria used to determine whether a government is controlling the assets to the final Statement. Further, the Board tentatively decided to define the term direct in the final Statement as, “The government, or its designee who is acting on behalf of the government, has the ability to use, exchange, or employ the assets. The designee, when applicable, is performing the government’s fiduciary duties and not assuming them. As a result, appointing a designee to act on its behalf does not change the fact that the government has the ability to use, exchange, or employ the assets.”

The Board then discussed the last sentence of paragraph 10 of the Exposure Draft. To clarify that restrictions that stipulate assets can be used only as described in a custodial or trust agreement do not negate a government’s control of the assets, the Board tentatively decided that the final sentence of paragraph 10 of the Exposure Draft should be modified to state, “Restrictions from legal or other external restraints that stipulate the assets can be used only for a specific purpose do not negate a government’s control of the assets.”

Next, the Board discussed the definition of own-source revenue. The Board tentatively decided to carry forward the definition provided in the Exposure Draft but expand upon it to include the notions of exchange, exchange-like, and nonexchange revenues. The definition should be included in the final Statement as follows:

Own-source revenues are revenues that are generated by a government itself. They include exchange and exchange-like revenues, for example, water and sewer charges, and investment income. Derived tax revenues, such as sales and income taxes, and imposed nonexchange revenues, such as property taxes also are included.

Additionally, the Board tentatively agreed that the definition will be included as its own separate paragraph in the Standards section, rather than in a footnote. To provide further explanation, the Board also tentatively decided to incorporate a discussion on the definition of own-source revenue in the Basis for Conclusions of the final Statement.

Finally, the Board discussed the four fiduciary criteria proposed in paragraphs 7(a)–7(d) of the Exposure Draft. As the Board’s original intent in the Exposure Draft was to apply the criteria at the asset level, the Board tentatively decided that the criteria should be applied to assets rather than activities. The Board also tentatively agreed to carry forward the criterion proposed in paragraph 7(a) of the Exposure Draft. Further, the Board tentatively decided to not define the term beneficiary in the final Statement.

The Board also discussed respondents’ feedback to paragraphs 7(b) and 7(c) and tentatively decided to carry forward the criteria, but to clarify that the assets also should not be derived from the government’s provision of goods or services to those individuals, organizations, or other governments. The Board then discussed criterion 7(d) regarding pass-through grants, and tentatively decided to carry forward the provision to the final Statement by applying the requirement at the same time as consideration is made in relation to own-source revenues, without further clarifying the term pass-through grant. Finally, because the Board’s intent is to develop the criteria using a principles-based approach, the Board tentatively decided not to provide guidance on the applicability of the fiduciary criteria to specific activities such as student activity funds and scholarship funds.

Minutes of Meetings, May 10-11, 2016

The Board began redeliberations of the Exposure Draft, Fiduciary Activities, by considering general feedback from respondents to the Exposure Draft, as well as testifiers at the public hearing held on April 21, 2016. First, the Board discussed comments generally supportive of and generally opposed to the provisions in the Exposure Draft. Next, the Board discussed comments related to the scope and applicability of the proposed Statement. As a result of the discussion, the Board tentatively decided to amend paragraph 5 in the final Statement to highlight that Statement 32, paragraph 4, as amended, is superseded, in its entirety. Finally, the Board discussed potential resolutions to issues raised by stakeholders regarding the identification of fiduciary activities, but no tentative decisions were reached.

Minutes of Teleconference, December 8, 2015

The Board reviewed a ballot draft of a proposed Statement, Fiduciary Activities. After providing clarifying edits and comments, the Board voted unanimously to approve the issuance of the Exposure Draft.

Minutes of Meetings, November 18-20, 2015.

The Board reviewed a preballot draft of the proposed Exposure Draft, Accounting and Financial Reporting for Fiduciary Activities, and provided clarifying edits on the draft document. The Board tentatively decided to change the name of the project to “Fiduciary Activities.” The Board then agreed to move forward with a ballot draft of a proposed Statement.

Minutes of Task Force Meeting, October 6, 2015

GASB Chairman David Vaudt opened the meeting at 8:30 a.m. by welcoming the task force members and providing introductory remarks. The task force members at the table and on the phone and others at the table introduced themselves to the group. Mr. Vaudt then turned the meeting over to Lisa Parker.

The first topic addressed was the concept of control and the criteria for identifying and reporting fiduciary activities. Ms. Parker explained the Board’s initial preliminary views regarding when a government has control over assets and, after determining that control is present, when to report those assets as fiduciary activities in the fiduciary fund financial statements. Ms. Parker discussed the Board’s rationale for developing its initial preliminary views on the issues, the feedback received from respondents to the Preliminary Views, Financial Reporting for Fiduciary Activities, and the Board’s tentative decisions as a result of its redeliberations of the issues and in response to feedback received. Task force members provided feedback on the issues. Some members noted that the removal of citizenry from the definition added clarity. Other members highlighted potential areas of confusion surrounding the lack of guidance to determine control for pension and other postemployment benefit trust fund arrangements and the concept of holding assets versus having custody of assets.

The next topic discussed was the reporting of fiduciary activities in fiduciary funds. Ms. Parker discussed the Board’s tentative decisions regarding the types of funds that should be included in fiduciary funds, the classification of activities as a particular fiduciary fund, and the focus of what should be reported within each type of fiduciary fund. Ms. Parker explained that pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds, and custodial funds should be used to report fiduciary activities. She also explained the types of resources that should be reported within each type of fund, as well as the fact that the classifications should be based, in part, on the presence or absence of a trust agreement or an equivalent arrangement. Task force members provided feedback on the decisions and also discussed the usefulness of having all fiduciary fund information reported in the fiduciary fund financial statements. A concern raised by some task force members was the confusion regarding the phrase individual investment accounts and whether individual college savings accounts would be reported as an investment trust fund or a private-purpose trust fund.

Next, Ms. Parker discussed the Board’s tentative decision that a liability should be recognized in a fiduciary fund when an event has occurred that compels the government to disburse the fiduciary resources. Task force members discussed the decision and, overall, did not object to the proposed provision.

Ms. Parker discussed the Board’s preliminary view that all fiduciary funds should report additions and deductions in the statement of changes in fiduciary net position. Additionally, all fiduciary funds would be required to report additions disaggregated by source and, if applicable, separately display investment income and investment costs; and deductions would be disaggregated by type and, if applicable, separately display administrative costs. Some respondents to both the Preliminary Views and the public hearings noted that there was a need to provide relief to governments that have custodial funds that are used to report resources held for a short period of time. As a result of the feedback received, the Board tentatively decided that governments that hold custodial resources for a period of three months or less can report a single amount for both additions and deductions in the statement of changes in fiduciary net position, without disaggregating in greater detail, as long as the descriptions of the totals are sufficient to indicate the nature of the resource flows. Some task force members discussed the potential ramifications of this exception, highlighting the fact that the exception may provide a benefit but at the expense of additional transparency. Other task force members expressed concerns about the potential cost and burden imposed by the proposed requirement to disaggregate administrative and investment costs.

The next topic discussed was the tentative decisions made by the Board concerning component units that are fiduciary in nature. Ms. Parker began by discussing the Board’s preliminary view that any legally separate entity that meets the definition of a component unit under Statement No. 14, The Financial Reporting Entity, as amended, and meets the proposed fiduciary reporting criteria would be reported in a fiduciary fund. Additionally, the Board’s preliminary view was that a fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should include the combined information of that component unit and its component units that are fiduciary in nature. The Board concluded that, based on respondent feedback to the Preliminary Views, the scope exception for component units should be clarified if it is presented after the control and fiduciary reporting criteria in the Exposure Draft. The Board reaffirmed its view during redeliberations on the reporting of fiduciary component units that also have component units that are fiduciary in nature. The task force members discussed this matter and did not object to the proposed guidance. However, some task force members expressed confusion surrounding the presentation of fiduciary component units and their component units that are fiduciary in nature. For example, some task force members were unsure whether blending criteria should be applied to these component units.

The final topic of the task force meeting was financial reporting of stand-alone business-type activities (BTAs) that are engaged in fiduciary activities. Ms. Parker discussed the Board’s initial view that a BTA that engages in fiduciary activities should report the activities in separate fiduciary fund financial statements in its basic financial statements. However, during redeliberations, the Board noted that some BTAs may need additional cost relief, especially if the BTA only has a few custodial funds that are held for a short period of time. Ms. Parker provided the proposed staff recommendation that was to be presented to the Board at the October 2015 meeting. The task force members did not object to the need to provide BTAs with relief when they hold custodial fund assets for a short period of time, nor did they object to the proposed requirement for all other fiduciary activities of BTAs to be reported in separate fiduciary fund financial statements.

Mr. Vaudt thanked all task force members for their participation and concluded the meeting at 11:45 a.m.

Minutes of Meetings, October 6-8, 2015

The Board began redeliberations by discussing the financial reporting of stand-alone business-type activities (BTAs) engaged in fiduciary activities. Specifically, the Board reviewed custodial fund reporting options that could provide BTAs with additional cost relief. The Board tentatively decided to propose that the assets and related liabilities of fiduciary activities that otherwise would be reported in a custodial fund may instead be included in the statement of net position of the BTA if those assets are generally held for three months or less. Additionally, the Board tentatively decided to propose that a BTA that chooses to report custodial assets and liabilities in its statement of net position separately report significant additions, to the extent that they exist, and deductions as cash inflows and cash outflows, respectively, in the operating activities category of its statement of cash flows.

Next, the Board discussed the effective date and transition provisions to be proposed in the Exposure Draft. The Board tentatively agreed that the Exposure Draft should propose transition provisions requiring that changes adopted to conform to the provisions of the Statement should be applied retroactively by restating financial statements, if practical, for all prior periods presented. If restatement for prior periods is not practical, the cumulative effect, if any, of applying the Statement 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 the first period that the Statement is applied, the notes to the financial statements should disclose the nature of the restatement and its effect. Also, the reason for not restating prior periods presented should be disclosed.

With regard to the effective date, the Board tentatively decided that the Exposure Draft should propose an effective date for fiscal years beginning after December 15, 2017. The Board also tentatively decided that earlier application should be encouraged. The Board then tentatively agreed that a 90-day comment period should be provided for the Exposure Draft.

The Board then considered whether the expected benefits of the financial reporting for fiduciary responsibilities exceed the perceived costs of implementation. The Board tentatively agreed that the expected benefits associated with the proposed requirements outweigh the anticipated implementation and ongoing costs.

Furthermore, the Board discussed the characteristics of the financial information that would be provided as a result of the proposed standard. The Board tentatively agreed that the proposed guidance would produce financial information that meets the needs of users, results from economic or financial events affecting the assessment of the governmental reporting entity, is relevant to reporting objectives, and falls within an appropriate information category in general purpose external financial reports.

The Board concluded deliberations by reviewing and providing clarifying comments on the proposed text of the standards section of the Exposure Draft.

Minutes of Meetings, September 1-3, 2015

The Board continued redeliberations on the Preliminary Views, Financial Reporting for Fiduciary Responsibilities.

The Board first considered respondents’ comments to the Preliminary Views regarding the recognition of a fiduciary liability. The Board reaffirmed its view and tentatively decided to propose that a liability be recognized in all fiduciary fund types when an event has occurred that compels the government to disburse fiduciary resources.

Next, the Board discussed respondents’ comments on the proposal to report additions and deductions in the statement of changes in fiduciary net position. The Board tentatively decided to propose that fiduciary funds report additions disaggregated by source and, if applicable, separately display investment income and investment costs, and deductions be disaggregated by type and, if applicable, separately display administrative costs. However, in order to relieve some of the burden on preparers and auditors for the cost and effort in preparing and auditing the fiduciary activity flows, the Board tentatively decided to propose that custodial fund activities, in which the government holds the resources for a period of three months or less, report a single amount for additions and a single amount for deductions in the statement of changes in fiduciary net position, without disaggregating in greater detail, as long as the descriptions of the totals are sufficient to indicate the nature of the resource flows. The Board also tentatively agreed that illustrative fiduciary fund financial statements should be included in the nonauthoritative appendix of the Exposure Draft.

Next the Board discussed the reporting of fiduciary component units of component units that are fiduciary in nature. The Board’s preliminary view was that a fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should include the combined information of its component unit(s) that are fiduciary in nature. Further, component units of a fiduciary component unit should be aggregated and combined with the primary government’s fiduciary fund financial statements based on the fiduciary fund type(s). Based on the respondents’ feedback to this proposal, the Board reaffirmed its view and tentatively decided to propose that this guidance be carried forward to the Exposure Draft.

The Board also discussed the potential impacts of the proposed description of when a government is a fiduciary on public entity risk pools. To align the proposal with the guidance in Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, the Board tentatively decided to exclude organizations or other governments that are recipients of a governments’ goods or services from the description of when a government is a fiduciary.

Next, the Board discussed note disclosures. The Board tentatively decided that existing guidance on disclosure of fiduciary fund types and specific fiduciary activities is sufficient and that no additional disclosures should be proposed in the Exposure Draft.

The Board also discussed the treatment of fiduciary activities for stand-alone business-type activities. The Board decided to continue deliberations on stand-alone business-type activities at a future meeting when the project staff has additional time to provide the Board with a possible recommendation that provides additional reporting relief to these specific entities.

Minutes Archive

Fiduciary Activities—TENTATIVE BOARD DECISIONS TO DATE


In response to stakeholder feedback to the Exposure Draft, the Board tentatively agreed to the following:
  • Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, paragraph 4, as amended, will be superseded, in its entirety, by the Statement in order to clarify that the fiduciary criteria proposed would be applied to Section 457 plans.
  • The term administer should be removed from the criteria used to determine whether a government is controlling the assets in paragraph 10 of the Exposure Draft to clarify how a government could control assets of an activity when it is not holding the assets.
  • The term direct should be carried forward in the criteria used to determine whether a government is controlling the assets to the final Statement. The term direct should be defined in the final Statement as, “the government, or its designee who is acting on behalf of the government, has the ability to use, exchange, or employ the assets. The designee, when applicable, is performing the government’s fiduciary duties and not assuming them. As a result, appointing a designee to act on its behalf does not change the fact that the government has the ability to use, exchange, or employ the assets.”
  • The final sentence of paragraph 10 of the Exposure Draft should be amended to state, “Restrictions from legal or other external restraints that stipulate the assets can be used only for a specific purpose do not negate a government’s control of the assets,” in order to clarify that restrictions that stipulate assets can only be used as described in a custodial or trust agreement do not negate a government’s control of the assets.
  • The definition of own-source revenue should be carried forward and expanded to include the notions of exchange, exchange-like, and nonexchange revenues. The definition should be included in the final Statement as follows:
    • “Own-source revenues are revenues that are generated by a government itself. They include exchange and exchange-like revenues, for example, water and sewer charges, and investment income. Derived tax revenues, such as sales and income taxes, and imposed nonexchange revenues, such as property taxes also are included.”
  • The definition of own-source revenue should be moved from a footnote to its own paragraph in the final Statement, and the Basis for Conclusions should be expanded to provide further explanation and discussion of the term.
  • The fiduciary criteria should be amended to clarify that the requirements for identifying fiduciary activities should be applied to assets rather than activities.
  • The fiduciary criterion proposed in paragraph 7a of the Exposure Draft (the assets are administered through a trust agreement or equivalent arrangement in which the government itself is not a beneficiary and the assets are both (1) dedicated to providing benefits to recipients in accordance with the benefit terms and (2) legally protected from the creditors of the government) should be carried forward to the final Statement without defining the term beneficiary.
  • The fiduciary criteria proposed in paragraph 7b of the Exposure Draft (the assets are for the benefit of individuals that are not required to be residents or recipients of the government’s goods and services as a condition of being a beneficiary) and paragraph 7c of the Exposure Draft (the assets are for the benefit of organizations or other governments that are neither part of the government’s financial reporting entity nor recipients of the government’s goods or services) should be carried forward with additional clarification that, “In addition, the assets are not to be derived from the government’s provision of goods or services to those individuals, organizations, or other governments.” Additionally, paragraph 7b should be amended in the final Statement to include the concept that the use of the assets are not substantively approved by the government.
  • The fiduciary criterion proposed in paragraph 7d of the Exposure Draft (the assets result from a pass-through grant for which the government does not have administrative or direct financial involvement in the program) should be carried forward to the final Statement by applying the requirement at the same time as consideration is made in relation to own-source revenues, without providing additional clarification of the term pass-through grant.
  • The final Statement will not provide guidance on the applicability of the fiduciary criteria to specific activities such as student activity funds and scholarship funds, due to the Board’s intent to develop the criteria using a principles-based approach.
  • To retain the concept of reporting fiduciary activities based on the presence or absence of a trust agreement. Governments should report external investment pools using two columns; investment trust funds for those pools held in a trust agreement or equivalent arrangement and custodial funds for those pools not held in a trust agreement or equivalent arrangement, in a sub-category titled external investment pool under the custodial fund heading.
  • Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, paragraph 18, as amended, be further amended to provide that external investment pools should be reported based fund classification guidance provided in the final Statement.
  • The term use should be retained when defining what is meant by direct in the control criteria. The term use should be defined as follows:
    • “When a government expends or consumes an asset for the benefit of individuals, organizations, or other governments, outside of the government’s provision of services to them”
  • To include additional clarification that a primary government should not consider whether it controls the assets of their fiduciary component units when determining whether or not the activity is fiduciary in nature.
  • To carry forward the provisions set forth in paragraph 23 of the Exposure Draft, which provides that when reported in the fiduciary fund financial statements of a primary government, fiduciary component units include the financial information from their own fiduciary component units
  • To carry forward the fund classifications presented in paragraphs 12, 14, and 15 of the Exposure Draft.