GASB No. 84 Fiduciary Activities

Overview

The Governmental Accounting Standards Board (GASB) has issued Statement No. 84 Fiduciary Activities. The requirements of GASB 84 will enhance consistency and comparability by establishing specific criteria for identifying activities that should be reported as fiduciary activities and clarifying whether and how business-type activities should report their fiduciary activities.

When is GASB 84 Effective?

GASB 84 is effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.

How Does GASB 84 Define The Fiduciary Funds That Should Be Reported?

• GASB 84 describes four fiduciary funds that should be reported, if applicable: pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds, and custodial funds.
• An organization that meets the component unit criteria, as described in GASB 14 (as amended), is a fiduciary activity if it is one of the following:
  -Pension plan or other postemployment benefit (OPEB) plan administered through a trust that meets the criteria of GASB 67 or GASB 74, respectively.
  -Circumstances in which assets from entities that are not part of the reporting entity are accumulated for pension or OPEB plans as described in GASB 73 or GASB 74, respectively.
• A component unit that is not a pension or OPEB plan is a fiduciary activity if the assets associated with the activity have one or more of the following characteristics:
  -The assets are administered through a trust agreement in which the government is not a beneficiary, are dedicated to providing benefits to recipients, and are legally protected from the creditors of the government.
  -The assets are for the benefit of the individuals and the government does not have administrative or direct financial involvement with the assets.
  -The assets are for the benefit of the organization or other governments that are not part of the financial reporting entity.
• In determining whether a component unit is a fiduciary component unit, control of the assets of the component unit by the primary government is not a factor to be considered.
• If pension and OPEB plans are not component units, the following are fiduciary activities if the government controls the assets:
  -Pension or OPEB plans administered through a trust that meets the criteria of GASB 67 or GASB 74, respectively.
  -Circumstances in which assets from entities that are not part of the reporting entity are accumulated for pensions or OPEB as described in GASB 73 or GASB 74, respectively.
• For activities not previously mentioned, the activity is a fiduciary activity if all of the following criteria are met:
  -Assets are controlled by the government.
  -Assets are not derived solely from the government’s own-source revenue, or from government-mandated or voluntary nonexchange transactions.
  -Assets that have one or more of the following: (1) Assets are administered through a trust in which the government is not a beneficiary, dedicated to providing benefits to recipients in accordance with benefit terms, and legally protected from the creditors of the government. (2) Assets are for the benefit of individuals and the government does not have administrative or direct financial involvement with the assets.

How Will GASB 84 Impact Your Financial Statements?

• An activity meeting the criteria of a fiduciary activity should be reported in a fiduciary fund in the basic financial statements, presenting a statement of fiduciary net position and a statement of changes in fiduciary net position.
• Business-type activities may report assets with a corresponding liability that otherwise should be reported in a custodial fund in the statement of net position if those assets, upon receipt, are normally expected to be held for three months or less.
• Except for pension and OPEB plans in a pension trust fund, a liability to the beneficiaries of a fiduciary activity should be recognized in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources.
• Changes made due to implementation of GASB 84 should be applied retroactively by restating financial statements for all prior periods presented.

Please note this summary of GASB 84 is not meant to substitute for reading it in its entirety.

Do you have questions regarding GASB 84? Please contact Katie Yates.