Trust and Agency (Fiduciary) FundsLearning ObjectivesFunds held in fiduciary capacity forExamples of external fiduciary relationshipsMay use other funds to account for fiduciary relationshipsAccountability FocusAgency FundsAllowable uses of Agency FundsTax Agency Funds (TAF)Functions of TAFAssessment of Tax (479-80)TAF makes collections (480)Distribution of Collections (480-81)Distribution of Collections (481)Slide 15TAF Financial Statements sOther AF ReportingCity of Dallas Agency Fund Combining Statement xSpecial Assessment Agency FundsTypes of Trust FundsPrivate Purpose Trust FundEstablish Fund and Make Investments (485)Received Interest & Sold Some Investments (485)Accrued Interest & Change in Fair Value Recognized (485)Payment to nonprofit organization (485)Financial Statements (486) SInvestment Trust FundsPension TrustsPlans classified asPension Accounting StandardsOPEB Accounting StandardsPrimary Accounting & Reporting RequirementsPrimary Accounting & Reporting Requirements (continued)Contributions accrued & partial payment made (490)Interest accrued and received (490)Benefit accruals (490)Payments made & annuities accrued (491)Annuities paid and Investments made & marked to fair value (491)Pension Reporting S REmployer Fund Reporting: Annual Pension CostsTrust and Agency(Fiduciary) FundsChapter 12Learning ObjectivesUnderstand & discuss circumstances when funds are usedDefine and distinguish among the four types of fundsPrepare basic journal entriesPrepare Agency Fund financial statementsPrepare Trust Fund financial statementsAccount for common transactions affecting more than one fund and GCA and GLTL accountsFunds held in fiduciary capacity forGovernment or its programs – endowment to finance research program or maintain recreational areaOthers, including individuals, other governments, or private organizationsExamples of external fiduciary relationshipsPension plansExternal investment poolsEndowments to finance scholarships for residents of governmentTaxes, insurance premiums, & dues withheld from employees pay to be transferred to othersTaxes collected for other governmentsMay use other funds to account for fiduciary relationshipsSpecial Revenue Fund – resources available for expendituresPermanent Fund – maintenance of principal requiredEnterprise Fund – special business-type activitiesAccountability FocusOn the government’s fulfillment of its fiduciary responsibilities during a specified period and on remaining responsibilities at the end of the periodDifference in assets and liabilities typically called “Net Assets Held in Trust”Agency FundsConduit or clearinghouse funds established to account for assets received for and paid to other funds, individuals, or organizationsOnly used for assets held for the benefit of othersAllowable uses of Agency Funds“Pure” pass-through grants – government serves only as a cash conduit (use of AF mandated by GASB)Payroll deduction collection & paymentsImprest checking accountReceipts must be allocated among several fundsSingle expenditure financed by several fundsTax Agency Funds (TAF)Used to combine tax levies from multiple governments in same geographic areaPractice avoids duplicating assessment and collection processesFunctions of TAFGovernments continue to maintain own tax records.Assessments turned over to TAF for collectionTAF sends out bills to taxpayersCollections made by TAFCollections distributed to participating governments, less collection fee that goes to government administering the TAFAssessment of Tax (479-80)Taxing UnitTaxes ReceivableAllowance for Uncollectible TaxesRevenues – Property TaxesTax Agency FundTaxes Receivable for Taxing UnitsDue to Taxing Units100,000400,0001,00099,000400,000TAF accounting or all funds – taxing unit shown for only one government.TAF makes collections (480)CashTaxes Receivable for Taxing UnitsDue to Taxing Units315,000300,00015,000Taxes receivable represents normal collections; due to taxing units represents interest and penalties.Distribution of Collections (480-81)Tax Agency FundDue to Taxing UnitsCashDue to General Fund315,000310,2574,743Due to General Fund is amount collected from other governments as service charge for taxes collected.Distribution of Collections (481)Taxing UnitCashTaxes Receivable – CurrentTaxes Receivable – DelinquentRevenues – Interest & PenaltiesDue from Tax Agency FundRevenues – Tax Collection Fee77,8504,75356,25018,0003,6004,753Distribution of Collections (481)Other Taxing UnitCashExpenditures – Tax Collection FeeTaxes Receivable – CurrentTaxes Receivable – DelinquentRevenues – Interest & Penalties153,9093,141112,50037,1257,425TAF Financial Statements sStatements of Net Assets – does not include cash balance of TAF since money belongs to the administering government (482)Statement of Changes in Assets & Liabilities (483)Not an operating statementOnly reports changes in assets & liabilitiesOther AF ReportingWill appear as a single column on the Fiduciary Fund Statement of Net AssetsWill not appear on Fiduciary Fund Statement of Changes in Fund Net AssetsHave separate combining statement if government has more than one AFCity of Dallas Agency Fund Combining Statement xExample is 2 pages extracted from FY 2004 CAFR1st page provides explanation for each of nine Agency Funds2nd page is the combining statement – not much information on each fundSpecial Assessment Agency FundsUsed when government is not obligated in any manner on debt issued to finance a special assessmentDebt is not accounted for by government, but asset will be in GCA listGovernment is debt service agentCollects assessments from property ownersMakes payments to debt holdersTypes of Trust FundsPension (or Other Postemployment Benefit) Trust FundsInvestment Trust FundsPrivate Purpose Trust FundsPrivate Purpose Trust FundNot common in governmentsMay be eitherExpendable – principal and earnings may be spentNonexpendable – principal must be maintained but earnings may be expendable or nonexpendableEstablish Fund and Make Investments (485)EstablishmentCashAdditions – NonexpendableDonationsInvestmentsInvestmentsAccrued Interest ReceivableCash210,000203,000400210,000203,400Received Interest & Sold Some Investments (485)Interest receivedCashAccrued Interest ReceivableAdditions –