Reporting Requirements for Annual Financial Reports of State Agencies and Universities
General Accounting
Governmental Reporting Overview
Fiduciary Funds
The implementation of GASB 84 increases consistency and comparability of fiduciary activity reporting by state and local governments.
Financial Statements
Report fiduciary activities on the fiduciary fund financial statements of the basic financial statements based on the requirements of GASB 84. These statements provide a separate column for each fiduciary fund type (combined statement) and GAAP fund (D24) (combining statement). Use the following financial statements to present fiduciary fund financial information:
- Statement of fiduciary net position
- Statement of changes in fiduciary net position
Use the economic resources measurement focus and the full accrual basis of accounting:
- Recognize revenues in the reporting period they are earned
–AND– - Recognize expenses in the reporting period they are incurred
Statement of Fiduciary Net Position
Use the statement of fiduciary net position to report:
- Assets
- Deferred outflows of resources
- Liabilities
- Deferred inflows of resources
- Fiduciary net position of pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds and custodial funds.
A liability to the beneficiaries of a fiduciary activity is recognized in a fiduciary fund when an event has occurred that compels the agency to disburse fiduciary resources. Liabilities other than those to beneficiaries are recognized in accordance with existing accounting standards using the economic resources measurement focus.
Agencies that report a pension plan or other postemployment benefits (OPEB) plan in trust must report changes in the plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position in accordance with GASB 67 or GASB 74, as applicable.
Statement of Changes in Fiduciary Net Position
Use the statement of fiduciary net position to report additions to and deductions from pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds and custodial funds.
Use the statement of changes in fiduciary net position to disaggregate additions by source including a separate display (if applicable) for:
- Investment earnings
- Investment costs (including investment management fees, custodial fees and all other significant investment-related costs)
- Net investment earnings (investment earnings minus investment costs)
Investment-related costs are reported as investment costs if they are separable from investment earnings and administrative costs.
The statement of changes in fiduciary net position must disaggregate deductions by type and include a separate display for administrative costs.
For custodial funds, agencies may report a single aggregated total for additions and a single aggregated total for deductions for which resources (upon receipt) are normally expected to be held for three months or less.
The descriptions of the aggregated totals of additions and deductions must indicate the nature of the resource flows. Examples of custodial fund additions and deductions descriptions are:
- Property taxes collected for other agencies or governments
- Property taxes distributed to other agencies or governments
Agencies that report a pension plan or OPEB plan in trust must report changes in the plan’s fiduciary net position in accordance with GASB 67 or GASB 74, as applicable.
See the Templates & Sample Exhibit section for a sample statement of fiduciary net position and statement of changes in fiduciary net position.
Fiduciary Component Units
If the agency reports a fiduciary component unit on the fiduciary fund financial statements, a fiduciary component unit must include the combined information of its own component units that are fiduciary component units. That combined information is aggregated with the agency's fiduciary funds based on the fiduciary activity: pension or OPEB trust, investment trust, private-purpose trust or custodial funds.
GASB 84 Paragraph 19 Exception
GASB 84 Paragraph 19 exception applies to business-type activities only (including enterprise funds), which may report assets with a corresponding liability, that otherwise are reported in custodial funds on the statement of fiduciary net position of the business-type activity, if those assets (upon receipt) are normally expected to be held for three months or less. Agencies that choose to follow the GASB 84 paragraph 19 exception to report all business-type activity must report additions and deductions separately (if significant) as cash inflows and cash outflows on the operating activities category of its statement of cash flows.
Or click on the headings below to open a topic individually.
Terms [+]
Control of Assets
The agency controls the assets of an activity if the agency:
- Holds the assets
–OR– - Has the ability to direct the use (expends or consumes the asset for the benefit of individuals, organizations, other agencies or governments), exchange or employment of the assets (appoints a designee to perform fiduciary duties and act on its behalf) in a manner that provides benefits to the specified or intended recipients
Own-Source Revenues
Own-source revenues are generated by the agency and include:
- Exchange and exchange-like revenues (for example, water and sewer charges)
- Derived tax revenues (for example, sales and income taxes)
- Imposed nonexchange revenues (for example, property taxes)
- Investment earnings
Administrative Involvement
The agency has administrative involvement with assets if it:
- Monitors compliance with established activity requirements by the state or resource provider of the direct benefits activity
- Determines eligible expenditures established by the state or resource provider of the direct benefits activity
–OR– - Has the ability to exercise discretion over how assets are allocated
The agency has direct financial involvement with the assets if, for example, it provides matching resources for the activities.
If the agency is a recipient of a pass-through grant, the definition of administrative involvement or direct financial involvement is followed, as prescribed in GASB 24 paragraph 5.
Fiduciary Activities Criteria [+]
GASB 84 establishes criteria for identifying fiduciary activities for all agencies to improve fiduciary activity reporting.
Fund Types 10, 18, 20 or 22
In order for the assets associated with the activity to be classified as a fiduciary activity, all of the following criteria must be met. The asset must be:
- Controlled by the state
- Not derived solely from the state’s own sources of revenues or from government-mandated or voluntary nonexchange transactions (with the exception of pass-throughs grants for which the state does not have administrative or direct financial involvement)
- Have one or more of the following characteristics:
- Administered through a trust in which the state (itself) is not a beneficiary; dedicated to providing benefits to recipients in accordance with benefit terms; and legally protected from the creditors of the state
- For the benefit of individuals and the state does not have administrative involvement or direct financial involvement and not derived from the state‘s provision of goods or services to those individuals
- For the benefit of organizations, other agencies or governments that are not part of the financial reporting agency and not derived from the state’s provision of goods or services to those organizations, other agencies or governments
Fiduciary Component Units
A component unit that is not a pension or OPEB arrangement is a fiduciary activity, if the assets associated with the activity have one or more of the following characteristics. The asset activity is:
- Administered through a trust in which the state (itself) is not a beneficiary; dedicated to providing benefits to recipients in accordance with benefit terms; and legally protected from the creditors of the state
- For the benefit of individuals and the state does not have administrative involvement or direct financial involvement and not derived from the state’s provision of goods or services to those individuals
- For the benefit of organizations, other agencies or governments that are not part of the financial reporting agency and not derived from the state’s provision of goods or services to those organizations or other governments
Control of the assets of the component unit by the agency is not a factor to be considered.
Identifying Fiduciary Activities by Fund Type [+]
Valid Trust Agreements
In order to report fiduciary activities as a trust in either FT10, FT18 or FT20, the agency must submit the applicable trust agreement(s) to frs@cpa.texas.gov for review.
Pension and Other Employee Benefit Trust Funds (FT10)
Pension and other employee benefit trust funds are used to report fiduciary activities for the following:
- Pension plans and OPEB plans that are administered through trusts
- Other employee benefit plans for which resources are held in a trust and contributions are irrevocable
External Investment Trust Funds (FT18)
Use external investment trust funds to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in a trust.
Private-Purpose Trust Funds (FT20)
Use private-purpose trust funds to report fiduciary activities that are not required to be reported in pension and OPEB trust funds (FT10) or external investment trust funds (FT18) and are held in a trust.
Custodial Funds (FT22)
Use custodial funds to report fiduciary activities that are not required to be reported in the other fiduciary activities fund types.
All higher education custodial activity is reported in GAAP Fund 3400, with the exception of external investment pools that are not held in a trust, which are reported in GAAP Fund 3450.
The external portion of investment pools that are not held in a trust must be reported in a separate column under the custodial funds classification.
The following are the most commonly used GAAP funds that were established to record activity in custodial funds (FT22).
| GAAP Fund Number | GAAP Fund Name | GAAP Fund Description |
|---|---|---|
| GAAP Fund 3300 | Donations — Custodial Funds | Used to record the receipt of voluntary contributions. |
| GAAP Fund 3500 | Patient — Custodial Funds | Used to record the receipt and usage of funds in state hospitals. |
Materiality Threshold
The threshold for custodial funds is set at $100,000. Any GAAP fund with yearly activity greater than $100,000 and meets the other criteria of a custodial fund must be reported in FT22. GAAP funds with yearly activity less than $100,000 must not be reported in FT22 but in a governmental or proprietary fund type and disclosed in Note 1.
GASB 84 Custodial Funds Implementation Guidance [+]
Presentation Changes
Pre-GASB 84 (Agency Funds)
- Agency funds were reported only to the extent of assets and liabilities
- Balances were recorded in the general ledger account funds held for others (GL 1149)
- Net position was not reported
Post-GASB 84 (Custodial Funds)
- Revenue and expenditure object codes are required with the changed presentation
- Object codes are used applicable to the activity
- All funds moved to governmental fund type (FT01) are reported on statements A-1 Combining Balance Sheet; A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance
- All funds moved to enterprise fund type (FT05) are reported on statements F-1 Combining Statement of Net Position; F-2 Combining Statement of Revenues, Expenditures and Changes in Net Position
The reporting presentation for fiduciary funds used to report custodial funds (FT22) are the J-1 Combining Statement of Fiduciary Net Position – Custodial Funds and J-2 Statement of Changes of Fiduciary Net Position – Custodial Funds.
- This is not a statement of cash flows
- Balances are not reported in funds held for others (GL 1149) for FT22
- Restricted net position is reported in FT22, usually due to timing differences
- Report separately (if applicable):
- Investment earnings/interest
- Investment costs
- Administrative expenses (related to investments)
Use the updated AFR Exhibit Template to ensure proper reporting presentation of fiduciary funds.
Exception: A custodial fund can be reported in enterprise business-type activity (FT05) instead of FT22. Report the custodial fund on the Statement of Net Position and Statement of Cash Flows if it meets all of the following criteria:
- Upon receipt, assets are expected to be held for three months or less
- Asset and corresponding liability presented on the Statement of Net Position
- Additions and deductions are reported separately as cash inflows and cash outflows on the Statement of Cash Flows
If the fiduciary activity does not meet all of the exception criteria, it must be reported in FT22, as previously stated.
Fund Changes
Agency funds are either:
- Suspense funds in a governmental
–OR– - Business-type fund or fiduciary funds
Suspense Funds — Formerly “Agency Funds” [+]
According to GASB 84, suspense funds are not related to fiduciary activity and are not reported in the fiduciary financial statements. Agencies must follow the reporting requirements located in the Suspense Funds tab.
Requesting an Additional GAAP Fund [+]
If the agency has new activity believed to be fiduciary and it does not fit the description of existing GAAP funds, a new GAAP fund may be requested from and reviewed by the Financial Reporting section.
If the agency wants to request a new GAAP fund, see Requesting an Additional GAAP Fund.
GASB Implementation Guide
For examples of fiduciary activity, see Implementation Guide No. 2019-2 — Fiduciary Activities.