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GASB 84: Next steps for fiduciary activities standard implementation

January 22, 2020 / 6 min read

Are you prepared for GASB 84 implementation? Here’s a breakdown of the implementation guide and action steps you can take now for a successful implementation.

In January 2017, the Governmental Accounting Standards Board (GASB) issued Statement 84, Fiduciary Activities. To provide key guidance and clarification to the standard, it issued Implementation Guide No. 2019-2, Fiduciary Activities, in June 2019. Here’s what you need to know about the Guide and action steps to take now.

First, a refresher on GASB 84

GASB Statement 84 is effective for fiscal years beginning after Dec. 15, 2018. The first step is to analyze potential fiduciary activities. Although a good starting point would be the fiduciary activities that are currently being reported in your financial statements, it’s critical to also consider other potential fiduciary activities based on other activities of your organization.

GASB Statement 84 defines four paths to identifying fiduciary activities:

  1. Fiduciary component units that are pension and other postemployment benefit (OPEB) arrangements
  2. Fiduciary component units other than pension and OPEB arrangements
  3. Pension and OPEB arrangements that aren’t component units
  4. Other fiduciary activities

The criteria for each of these paths is outlined in our article, GASB Statement 84: The changing landscape of fiduciary activities.

GASB 84 changes the reporting of fiduciary activities significantly.

Implementation guide clarifications

GASB Implementation Guide 2019-2, Fiduciary Activities, clarifies certain concepts within the standard and gives specific examples of decision points when identifying fiduciary activities.

One of the most significant clarifications is the treatment of pension and OPEB plans, particularly in relation to the definition of a component unit. Understanding how the implementation guidance might change what we once thought of as a component unit, particularly with these plans, is critical to making the right determination under GASB 84. Certain plans, which previously weren’t included in a government’s financial statement, may now meet the definition of a fiduciary component unit. This will require additional effort by the employer to gather the necessary information to achieve the required financial reporting along with additional effort by auditors who will need to test this information for the first time.

In addition to the above clarification, the Implementation Guide provides guidance to many common scenarios, including defined benefit plans (with and without appointment of a voting majority of the board members by the employer), retainages, payroll withholdings, performance deposits, and student organization and scholarship funds, among others. The Implementation Guide should be considered a key resource in understanding this standard.

After identifying all potential fiduciary activities, you’re ready to move on to the next step: reporting.

GASB 84 and reporting

GASB 84 changes the reporting of fiduciary activities significantly. First, it defines the four types of fiduciary funds as pension and OPEB trust funds, investment trust funds, private-purpose trust funds, and custodial funds. Custodial funds have replaced what was previously known as agency funds, although the criteria are slightly different.

This standard will have considerable impact on governmental financial statements. The time to prepare for implementation is now.

There are two statements required to be presented in the financial statements under the new standard: the Statement of Fiduciary Net Position, and the Statement of Changes in Fiduciary Net Position.

GASB 84: Action items

This standard will have considerable impact on governmental financial statements. The time to prepare for implementation is now. The following items will help you ensure a smooth implementation.

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