Fiduciary Activities

Why Did the GASB Establish Guidance on Fiduciary Activities?

Governments are required to report fiduciary activities in fiduciary fund financial statements. Until now, standards have not been explicit about what constitutes a fiduciary activity for financial reporting purposes. Consequently, diversity in practice with regard to identifying and reporting fiduciary activities has existed.

Statement No. 84, Fiduciary Activities, establishes guidance regarding what constitutes fiduciary activities for accounting and financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported.
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What is a fiduciary activity?

Just what exactly constitutes a fiduciary activity seems fairly straightforward—it involves when a government is taking care of money that belongs to individuals or other outside of the government itself. But that definition could be applied to some grants and tax revenues that governments receive and use to finance providing services.

Statement No. 84 lays out a series of questions that a government should ask when evaluating whether they are engaged in a fiduciary activity.


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What is the GASB requiring?

GASB Statement No. 84, Fiduciary Activities, establishes criteria for identifying fiduciary activities of all state and local governments. The criteria generally focus on:
  1. whether a government is controlling the assets of the fiduciary activity, and
  2. the beneficiaries with whom a fiduciary relationship exists.
Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities.

An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position.

This Statement describes four fiduciary funds that should be reported, if applicable:
  1. pension (and other employee benefit) trust funds,
  2. investment trust funds,
  3. private-purpose trust funds, and
  4. custodial funds.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should combine its information with its component units that are fiduciary component units and aggregate that combined information with the primary government’s fiduciary funds.

Statement No. 84 also requires a government to recognize a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources.

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What is Next?

Statement No. 84 is available for download at no charge from the GASB website. Printed copies of the Statement are also available for purchase in the GASB Store.

The requirements of the Statement are effective for reporting periods beginning after December 15, 2018, with earlier application encouraged.

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