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Fiduciary Funds

Fiduciary Funds. Used to account for funds held by Govt entity as a Trustee or Agent Uses Accrual basis of accounting and Economic Resources measurement focus (2 Exceptions) Only Fund Statements are prepared by Fund Type Statement of Net Assets Statement of Changes in Fiduciary Net Assets

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Fiduciary Funds

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  1. Fiduciary Funds • Used to account for funds held by Govt entity as a Trustee or Agent • Uses Accrual basis of accounting and Economic Resources measurement focus (2 Exceptions) • Only Fund Statements are prepared by Fund Type • Statement of Net Assets • Statement of Changes in Fiduciary Net Assets • Combining Statements

  2. Categories of Fiduciary Funds • Agency: Assets held temporarily • Private-Purpose Trust: P and I held for benefit of individuals, organizations, or other governments (External) • Very similar to Permanent Funds, except may be expendable or non-expendable • Investment Trust Fund: Multi-government investment pool • Pension Trust Fund: Govt is the sponsor of post-employment benefit plan

  3. Agency Funds • Nature of Fund • Assets held for one or more intergovernmental agencies on a temporary basis • Collect and disburse funds to other govt entities usually charging fees (1-3%) for efforts • Accounting Peculiarities • No Revenue, expenses or Net Assets (Exception Number 1 to accrual and economic resources) • Not a part of Government-wide financial reporting • Combining Statements reported in CAFR (p 183)

  4. Private-Purpose Trust Funds • General • Set up by trust agreements as expendable or non-expendable; (Permanent funds are NE) • P and I benefit individuals, external governments, or private organizations (City or County Industrial Development Corporation) • Accounting and Reporting • Investments at FMV (GASB #31)

  5. Investment Trust Funds • General • Government is the Sponsor of multi-government investment pool (State of Tennessee Investment Pool) Counties might have a similar pool • Internal Pools (Within the reporting govt entity:General Fund; Enterprise; Private-Purpose • External Pools (Multi-government reporting) Internal portion to various funds and external portion to various governments represented • Investments carried at FMV

  6. Pension Trust Funds • Types of Plans • Single Employer • Multi-Employer • Agency: Each contributor-employer has a separate account and is responsible for keeping own contributions up-to-date • Cost Sharing: Separate accounts are not maintained so unfunded liabilities are made up on a total trust fund basis • Contributory: Employees contribute • Non-Contributory: Employer only contributes

  7. Pension Trust Funds • Types of Plans, Continued • Defined Benefit: Retirement benefits are set before retirement begins (2% of average 5 year high salary for each year of service) • This is the type that is typically under-funded • Defined Contribution: Defines the amount of annual contribution only (6% of current salary) • Reporting Requirements • When PERS is part of reporting entity, must be included in CAFR

  8. Pension Trust Funds • Reporting Requirements, Continued • When PERS is not a part of reporting entity, it is not included in CAFR • So, Tennessee Consolidated Retirement System is reported in State CAFR, but TIAA-CREF participation is not, even though the State contributes to it on behalf of its employees • Financial Statements • Statement of Net Assets • Statement of Changes in Net Assets

  9. Pension Trust Funds • Schedules for Defined Benefit Plans • Schedule of Funding Progress • Schedule of Employer Contributions • Notes to Financial Statements • Defined Benefit Plans: Much more information is required to be disclosed • Defined Contribution Plans: Not as much information is required • See pp 192-193

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