Industry Insights

Proposed Changes to a Government’s Reporting of Its Fiduciary Activities

January 2016

Executive Summary

On December 22, 2015, the Governmental Accounting Standards Board (GASB) issued an exposure draft, Fiduciary Activities, proposing to provide users of both general-purpose and special-purpose financial statements more consistent and comparable information for assessing a government’s accountability in its role as a fiduciary.

The proposed statement would delineate specific criteria for identifying activities state and local governments should report as fiduciary activities. The focus of the criteria is whether a government controls the assets of the fiduciary activity and the beneficiaries with whom a fiduciary relationship exists. The proposal clarifies how a government should report those activities and beneficiary liabilities. It provides an exception to the requirements for a business-type activity that expects to hold assets in a custodial fund for three months or less.

A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, would combine its information with its component units that are fiduciary in nature, in the appropriate fiduciary fund types.

The requirements of this proposed statement would be effective for reporting periods beginning after December 15, 2017, and earlier application would be encouraged. GASB is seeking feedback on the proposal with a comment deadline of March 31, 2016.

Key elements of the proposed guidance address when a government should report an activity as a fiduciary activity and how it should be reported. 

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