GASB’s Statement No. 84, Fiduciary Activities is effective for all fiscal years beginning after December 15, 2018, so your district should be implementing the changes now, if it hasn’t already. This article is part of an Internal Control Tips Series and is co-written by Weaver's Debbie Kirkham-Young, CPA and John DeBurro, CPA.
Do your financial reports comply with the latest guidance from the Government Accounting Standards Board (GASB) about fiduciary funds? GASB’s Statement No. 84, Fiduciary Activities is effective for all fiscal years beginning after December 15, 2018, so your district should be implementing the changes now, if it hasn’t already.
What Is a Fiduciary Activity?
For school districts, an activity is considered “fiduciary” when a district oversees assets that belong to individuals or others outside of the district. Previously, information on identifying and reporting these items was found primarily in GASB Statements 14, 34, 61 and NCGA Statement 1. Because the definition of a fiduciary activity is so broad, GASB has released an implementation guide answering some common questions to help districts determine what activities qualify as fiduciary.
Once your district has determined that a specific activity is fiduciary, then you must identify the fund type. GASB 84 defines four types:
1. Pension and other employee benefit trust funds
2. Investment trust funds
3. Private-purpose trust funds
4. Custodial funds
When to Report Assets
Statement No. 84 was developed to improve consistency and comparability by establishing specific criteria for identifying and reporting fiduciary activities. It includes four paths for determining when a district should report assets in a fiduciary fund, depending upon factors such as:
- Whether the assets are held by a component unit
- Whether the assets are held for a pension or other postemployment benefits (OPEB) arrangement
- Whether the government controls the assets
- Whether the government has administrative or direct financial involvement
What Has Changed?
Under GASB 84, your district’s specific changes in reporting will depend upon numerous factors. For example, with student activity funds (clubs), school districts that control the assets but do not have administrative or direct financial involvement will report the activity in a fiduciary custodial fund. However, those districts that control the assets and have administrative or direct financial involvement will report the activity in a governmental fund. Remember, accounting control does not indicate administrative or direct financial involvement.
As David Marx of TEA noted in his communication on May 23, 2019, “most student activity funds will remain in fund 865.” However, depending on the circumstances, they could be a governmental fund.
Agency funds will not only have their titles changed to custodial funds, but the district will be required to report fund activity in a statement of changes in fiduciary net position for the first time.
Don’t forget about those scholarship funds! In order for districts to report them as private-purpose trust funds, GASB 84 requires such funds to be held in a trust and be legally protected from creditors. If the funds are not in a trust and the district has direct financial involvement, the activity will be reported in a governmental fund. If the district does not have administrative or direct financial involvement, such activity will be reported in a custodial fund.
Changes may go both ways. Activities that were previously reported as fiduciary may no longer meet the definition; conversely, others that have been governmental or business-type may now be considered fiduciary. Because such changes could have considerable impact, districts should not wait for the end of the year before planning their GASB No. 84 implementation. The time to plan is now.
In identifying fiduciary activities, consider reviewing the potential inclusion of 403b plans, 401a plans, or other employee benefit plans. What else? The GASB has issued an exposure draft for 457 plans for public comment.
To understand the changes that will affect your district, study the recently released implementation guide from GASB. It contains key reporting assistance that clarifies, explains or elaborates on the requirements of Statement No. 84, including areas such as control of assets; own-source revenues; assets for the benefit of individuals, organizations and other governments; and reporting fiduciary activities in investment trust funds, private-purpose trust funds and custodial funds. For this assistance and information on implementation, download the complete Implementation Guide No. 2019-2, Fiduciary Activities.
Getting Help — Free Webinar on GASB 84
Wondering how to guide your organization’s implementation of GASB 84? Weaver is offering a free webinar on Wednesday, October 16th, to take a deep dive into the new standard. We will lead you through the nuts and bolts so that you will understand how to identify fiduciary activities and how to report them. We will also walk through several examples to help you master the changes.
There’s no cost for this one-hour online course — register here today to reserve your space.
Partner Debbie Kirkham-Young, CPA, has more than 30 years of experience auditing government agencies, including school districts such as Cypress-Fairbanks ISD and Klein ISD. She is a member of TASBO, ASBO and GFOA, and frequently presents continuing education classes for professional organizations, clients and other CPA firms.
Partner John DeBurro, CPA, has 20 years of experience leading audits for school districts, municipalities and other government entities. He manages annual financial audits for both small entities and those with government-wide net positions in excess of $500 million. With John’s extensive government and nonprofit experience, he is a sought-after speaker for industry conferences and trainings.
See weaver.com for more information.