F8: Fiduciary Funds Flashcards
What are the four fiduciary funds?
PAPI
1) pension trust
2) agency
3) private purpose
4) investment trust
are statement of cash flows required for fiduciary funds?
NO CF’s required
what are the required financial statements for fiduciary funds?
1) statement of fiduciary net position
2) statement of CHANGES in fiduciary net position
3) footnotes
what is purpose of pension trust?
account for government sponsored benefit and defined contribution plans and other employee benefits such as postretirement health care benefits.
ex: employee retirement plan
what are revenue sources of pension trust?
1) employer and employee contributions - restricted account
money from other funds:
DR cash
CR additions: employer contributions - restricted
2) other fund transferring money to this fund
a) modified accrual (GRaSPP)
DR expenditures
CR cash
b) full accrual (SE-PAPI)
DR expenses
CR cash
3) income from investments
what are the expense types for pension trust funds?
ex: benefits payments, refunds, and admin expenses
what are the unique accounting issues with pension trust funds?
1) accounting
- full accrual: no budget and no encumbrances are used
- changes in net pension liability: included in the pension expense of government wide F/S and the appropriate funds responsible for funding the pension obligation. however, certain changes in the liability that are not included in pension expense are required to be reported as deferred outflow and deferred inflows of resources
> changes in net pension liability that are charge to pension expense: current period services costs, interest on total pension cost, reduction for projected earnings on pension plan investments, changes in benefit terms not eligible for deferral
> changes in net pension liability that are accounted for in deferred inflow and outflow resources: changes of economic and demographic assumptions or other inputs, differences between projected earnings and actual experience, employer contributions subsequent to measurement date
- basis of accounting: pension trust capitalize FA and record depreciation expense, carry LTD and pay both principal and interest
what are the financial statements of pension trust?
1) statement of fiduciary net position - reports assets, liabilities, and net position. asset = FAIR VALUE. liabilities subtracted from assets = NET POSITION
2) statement of changes in fiduciary net position (i/s)- report net increase or decrease in net position from beg of year until end of year.
a) additions: contributions received from employees and employers; net appreciation (depreciation) of FV of plan assets , premiums and discounts on debt securities
b) deductions - pension benefit payments to retirees and beneficiaries and admin expense
3) CF NOT required (unlike proprietary funds)
4) notes to F/S - investment disclosures, net pension liability, significant assumptions and other inputs to calculate total pension liability
5) required supp information - significant methods and assumptions, explanation of trends, sources of changes in net pension liability, information about components of net pension liability
what is purpose of agency trust fund?
collects cash to be held temp for an authorized recipient to whom it will be later disclosed. this recipient may be another fund or some individual or firm or even government outside the government (like MAILMAN).
ex: tax collection funds, clearance funds, special assessments
what are the revenue sources for agency funds?
revenues are not recognized
what are the expense types for agency funds?
expenses not recognized.
what are the unique accounting issues for agency funds?
1) tax collection funds - when one local govt collects a tax for an overlapping govtl unit and remits the amount collected, less admin charges, to the recipient unit
when county collects and retains a fee:
DR cash
CR due to other units
CR due to county general fund (fee)
2) clearance funds - used to accumulate a variety of revenues from diff sources and apportion them to various operating funds in accordance with a statutory formula or procedure
- > cash conduit arrangements (NO MONITORING): food stamps, traffic citations, alimony, child support, pass-through grants. if there IS monitoring, the SPECIAL revenue fund is used
3) special assessments - when government unit is “not otherwise obligated” for the debt (NOT primarily or potentially liable), the receivables and debt service transaction are accounted in agency fund (if govt unit HAS liability, accounting made through the CAPITAL projects AND debt service funds)
what are the financial stmts for agency fund?
1) statement of fiduciary net position where current assets = current liabilities … therefore no net position. agency funds usually have no YE balances as monies are periodically transferred to clear the fund
2) no income statement
3) no CF
what is the purpose of private purpose trust?
reporting all other trust arrangements under which principal and income are for the benefit of one of the following:
- specific individuals
- private organizations
- other governments
NOT general public use
ex: escheat property fund, inmate commissary/general store
what are revenue sources of private purpose fund?
- the income from the principal of a private purpose fund may be placed with another fund (ex: general fund)
1) general fund
JE to record transfer of income to general fund
DR due from private purpose trust
CR transfer from private purpose trust
JE to record transfer of cash to general fund
DR cash
CR due from private purpose trust
2) private purpose trust
JE to record obligation to transfer income to general fund
DR interfund transfer to general fund
CR due to general fund
JE to record transfer of funds to general fund
DR due to general fund
CR cash
