What Your Organization Should Know About GASB 84

by Bonnie Schwieger, CPA

As you may have noticed, the Government Accounting Standards Board (GASB) has been issuing new standards over the last few years in a bid to improve the financial reporting of U.S. and local governments. The GASB’s goal is to provide better information to financial statement users. In January 2017, the GASB issued Statement No. 84, Fiduciary Activities, to eliminate ambiguity around how to define and report fiduciary activities. The statement is effective for fiscal years beginning after December 15, 2018.

Now, after two years of anticipation, it’s time to act: GASB 84 will affect your 2019 audit. Here’s what you should know about it.

What is GASB 84?

GASB 84 establishes criteria for identifying fiduciary activities. In a nutshell, it narrows the existing definition of a fiduciary fund and clarifies how these funds should be treated in the financial statements. Previously, different organizations defined and reported fiduciary funds in different ways. GASB 84 will allow fiduciary activities to be consistently compared across all governmental units.

What do you need to do to implement it?

First, identify your existing fiduciary funds. Look at what’s currently in your financial statements. Then, evaluate the criteria of GASB 84 to see which of your existing fiduciary funds will meet the new, narrowed definition of a fiduciary fund.

Per GASB 84, a fiduciary fund must meet the following criteria:

1. Assets are controlled or directed by the government.
2. Assets are not derived from the government’s own source revenue or government-mandated nonexchange transactions.
3. Assets have one or more of the following characteristics:

• • Assets are administered through a trust, and the government is not a beneficiary. The trust must be dedicated to providing benefits to the recipients and legally protected from creditors of the government.
  • Assets are for the benefit of organizations or other governments that are not part of the financial reporting entity.
  • Assets are for the benefit of individuals and are not administered in any way by the government.

You’ll need to update your financial statement depending on the types of fiduciary activities you report. Keep in mind that activities previously considered fiduciary may no longer fit the definition.

If a fund does not meet the criteria laid out by GASB 84, determine where to report it on your financial statement. Should it show up in your general fund? Capital project fund? Special revenue? Choosing the best place for it will require careful consideration.

What do you need to do right now?

Again, GASB 84 will affect your 2019 audit, so it’s important to start identifying your organization’s fiduciary funds as soon as possible. Complying with GASB 84 may be complicated at first, but don’t worry—we’re here to help. The Abdo team can walk you through the process of applying the new criteria and revising your financial statements. If you have questions about GASB 84 or how to implement it, contact us today.