Journal Entries

This recurring website feature highlights articles from The GASB Report, the GASB’s monthly newsletter. The current article appeared in the August 2013 issue.

Project on Fiduciary Responsibilities Added to Current Technical Agenda

After consultation with the Governmental Accounting Standards Advisory Council in June, the Board voted unanimously to add a project on Fiduciary Responsibilities to the current technical agenda at its August meeting. The project was elevated from the pre-agenda research portion of the technical plan.

The primary objective of this project is to develop guidance regarding the application of the fiduciary responsibility criteria in deciding 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 to:

1. Clarify the difference between a private-purpose trust fund and an agency fund
2. Clarify whether a stand-alone business-type activity (BTA) engaging in fiduciary activities should present fiduciary fund financial statements
3. Require a combining statement of changes in assets and liabilities for agency funds
4. Amend existing disclosure requirements or require additional disclosures for fiduciary activities.

Research conducted by the GASB as well as technical inquiries received from constituents have indicated that there is inconsistency in the current reporting of various types of fiduciary activities, with different governments reporting or not reporting identical activities. This inconsistency results from confusion in practice regarding what constitutes fiduciary responsibility. Research has further indicated a general inconsistency in the reporting of fiduciary activities between BTAs and general purpose governments.

A project on fiduciary responsibility was added to the GASB’s long-term projects list in 2000. In 2008, that project was incorporated into the Statement No. 14, The Financial Reporting Entity, reexamination project. The Statement 14 reexamination project staff conducted limited research into the state of reporting for fiduciary activities and found that the meaning of fiduciary responsibility is not well defined but that some commonalities in reporting may provide a basis for further guidance. At that time, the Board concluded that the issues associated with fiduciary responsibility were broader than reporting entity considerations and removed those issues from that project. The topic was moved to the GASB’s research agenda (now referred to as pre-agenda research).

In the second quarter of 2013, the project staff conducted telephone interviews with users who were interested in a government’s accountability for its fiduciary activities. Interviewees generally stated that most of the fiduciary activity information required to be reported by current standards was important to their assessment of a government’s accountability for its trust and agency activities.

Board deliberations on Fiduciary Responsibilities are due to begin at the August teleconference. Issuance of an Exposure Draft on Fiduciary Responsibilities is scheduled for September 2014.