Fiduciary Type Funds
Why do governments use fiduciary funds?
To benefit individuals/ entities outside of the government
The creditors of the sponsoring government/ employer
What is the purpose of an Investment Trust Fund?
To pool the resources of more than one legally separate government and invest assets into another government to achieve economies of scale
What is the purpose of a Private-Trust Fund?
To provide benefits to beneficiaries outside of the government
What are Custodial Funds used to report?
Fiduciary activities not required to be reported in other types of fiduciary funds
Government's use fiduciary funds to hold assets as a " " for individuals/ entities outside of the government?
Trustee/ Custodian
What is an example of a post retirement benefit?
Health care, dental, hearing, long- term care insurance
What is the measurement focus and basis of accounting for an Investment Trust Fund
Economic Resources Focus and Full Accrual Basis of Accounting
How are assets classified in a Private- Purpose Trust Fund?
Through a trust where principal and earnings are maintained to benefit those outside of the government
Who/ What do the assets of a Custodial Fund benefit?
Individuals, organizations, or other governments
What are the four types of fiduciary funds?
Pension Trust Fund
Investment Trust Fund
Private Purpose Trust Fund
Custodial Fund
How are Pension's funded?
Employer's typically make an annual contribution into a trust during the working lives of their employees
What account is credited when there is an increase in the fair value of an investment
Additions- net increase in fair value of investments
What financial statements are required for the Private- Purpose Trust Fund?
Statement of changes in fiduciary net position and Statement of fiduciary net position
What is one of the most common uses for a Custodial Fund?
A clearing mechanism for recording property taxes collected on behalf of another government
What is the formula for Net Pension or OPEB liability?
Total Pension or OPEB liability- Related Pension or OPEB Plan's Net Position
What is the difference between a defined benefit and defined contribution plan?
In a defined benefit plan the employer promises to provide retirees with future benefit over a period of time vs. a defined contribution plan where the employer contributes a % of the employees salary to an account in their name.
Debit: Deductions- Investment Costs
Credit: Cash
Net position is " " on the statement of fiduciary net position?
Restricted
When is a liability recorded in a Custodial Fund?
When an event occurs that compels a government to disburse fiduciary resources including demand for resources or an approval/ condition is met to release the assets to a beneficiary
What is the purpose of an actuary?
An actuary supplies the government with information to report their pension expense
What are the three Pension or OPEB plan structures?
Single- employer, Agent- multiple employer, and Cost- Sharing
How is income allocated for the period?
Income is allocated to each participant based on the trust agreement which usually relates to how much is invested in the trust
What is the journal entry to record the gain on sale of an investment?
Debit: Cash
Credit: Investments
Credit: Additions- net increase in fair value of investments
What is a requirement for an asset to be reported in a Custodial Fund?
Individuals or the government do not have direct involvement with the assets or, organizations or other governments are not apart of the financial reporting entity