Government GPS

The Latest Rules and Regulations That Impact Your Government Entity

Don’t forget about GASB 84!

With COVID pushing implementation dates back and leases on our heels, we do not want to forget about implementing GASB 84 as of June 30, 2021. This GASB’s purpose is to help clarify the differences of Fiduciary funds and related component units and how it’s reported. Fiduciary funds’ definition has been revised and updated to help government entities be clearer about what entities should be included or excluded from Fiduciary fund statements.

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The Fiduciary component units include the following and should be reported in fiduciary funds:

  1. Pension or OPEB plans that are held in a separate trust
    1. These assets are not a part of the reporting entity.
  2. If not a Pension or OPEB plan, it still qualifies as fiduciary if
    1. Administered through a trust and dedicated to providing benefits to individuals and legally protected from creditors.

If the activity does not meet the criteria above for Pensions or OPEB activity, there are other factors that need to be assessed. ALL of the following facts must be met to qualify as a Fiduciary activity:

  1. Assets are controlled by the government
  2. Assets are not derived from government’s
    1. own-source revenues
    2. non-exchange transactions (exception for pass-thru grants where government does not have administrative or financial involvement)
  3. Assets have one or more of the following:
    1. Administered through a Trust, where government is not a beneficiary, assets provide benefits to recipients and legally protected from creditors
    2. Assets are benefits of individuals and government does NOT have administrative or financial involvement.
    3. Assets are for benefit of organization or other entity NOT part of the financial reporting entity.

One major example for School districts relates to the student activities and auxiliary funds. Since the funds are not held in a trust and the school has direct administrative involvement, they do not meet the definition of a Fiduciary fund. Therefore, they need to be reported as a special revenue fund and report in the fund financial statements. The Auditor General’s website includes the footnotes needed to report the prior period adjustments for financial statement presentation.

For a business-type entity, if the assets are held for less than three months, there is an exception and it does not need to be reported as Fiduciary. Materiality may have a factor in reporting separately as well.

There may be other exceptions related to your organization. Ask your auditor if you have an entity that meets the basic criteria above for implementing GASB 84. This will start the conversation and make sure the entity is reported correctly for implementation.

If you have any questions, please contact your Henry+Horne advisor.

Noemi Barter, Supervisor

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