While Government Accounting Standards Board (GASB) Statement 87, Leases (effective for years ended June 30, 2021) has been getting a lot of attention, GASB Statement 84, Fiduciary Activities (effective for years ended June 30, 2020) has been stealthily flying below the radar getting little coverage. The purpose of
GASB 84 is to provide guidance for identifying fiduciary activities and reporting on them.
The four types of fiduciary funds are:
1. Pension and other postemployment benefits (OPEB) – assets that are for the benefit of the plan participants that are administered through a legally separate trust. This is not applicable to public institutions that participate in their state’s pension and OPEB plans.
2. Investment trust funds – external portions of an investment pool that are held in trust for another organization that is legally protected from the creditors of the government
3. Private purpose trust funds – any funds held on behalf of others in a legally separate trust.
4. Custodial funds – any funds held on behalf of others that are not in a legally separate trust.
To be considered a fiduciary fund, an activity must have all three attributes below:
• The assets associated with the criteria are controlled by the government.
• The assets associated with the activity are not derived either:
— Solely from the government’s own source revenue,
— From non-exchange transactions.
• The assets associated with the activity have one or more of the following characteristics:
— The assets are for the benefit of organizations or other governments that are not part of the financial reporting entity and the assets are not derived from
the government’s provision of goods or services to those organizations or governments.
— The assets are:
»» administered through a trust in which the government is not a beneficiary;
»» dedicated to providing benefits to recipients in accordance with the benefit terms and
»» legally protected from the creditors of the government.
— The assets are for the benefit of individuals and the government does not have administrative or direct financial involvement with the assets; The assets are not derived from the government’s provision of goods or services to those individuals.
Let’s examine the attributes for the most common potential fiduciary funds for a higher educational institution: student clubs. The funds are controlled by the government if they are in the institution’s bank account. An institution’s own sources of revenue would be tuition and fees charged to students, and non-exchange transactions would be an appropriation from another government entity. Therefore, if the student club’s funds are derived from tuition and fees or an appropriation from another entity, the activity is not a fiduciary. Only part III from c above would apply to higher educational institutions. Administrative involvement is based upon the substance of form analysis. It would not be the business office reviewing the disbursement for appropriateness, but rather if an employee of the University, such as a faculty advisor, had approval over the type of disbursement that could be made for the student club. Fiduciary activities would be reported on the Statement of Fiduciary Net Position, no longer being reported in the Statement of Net Position. In addition, entities would also be required to disaggregate additions (e.g. contributions, investment earnings, collections on behalf of others, etc.) and deductions (benefits paid, payments to other organizations, administrative expenses, etc.) for fiduciary activities by source in the Statement of Changes in Fiduciary Net Position. Exceptions exist for applying GASB 84 for a lack of materiality of the fiduciary activities and if the funds are held for others under usual situations are held for three months or less.
O’Connor & Drew, P.C. recommends that institutions make a listing of possible fiduciary activities and perform an analysis of material items based upon the above attributes. ported currently. Generally, the most significant change may be in the way the summer terms are recognized. The ASU also contains disclosure
requirements to provide users information to understand the nature of contracts with customers. The disclosure requirements are grouped into several categories
and include general disclosures, disaggregation of revenues, contract balances, and performance obligations to name a few. The new standard is complex and
comprehensive. Organizations are encouraged to review the standard and to determine its relative impact. O’Connor and Drew, P.C. is available to assist with any questions related to the standard.