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Business and Policy Areas
Business and Policy Areas

GASB Releases Preliminary Views on Fiduciary Activities

December 1, 2014

On November 20, the Governmental Accounting Standards Board (GASB) issued for public comment a Preliminary Views titled, "Financial Reporting for Fiduciary Responsibilities." A Preliminary Views (PV) document is used by GASB to gather additional information on a topic before the issuance of an exposure draft. The PV presents the Board's initial views on what it believes are the primary issues associated with the reporting of activities in which a governmental entity, such as a public college or university, has a fiduciary responsibility.

Fiduciary responsibilities are those for which a government acts as a trustee or custodian in controlling assets that belong to others. The PV seeks to clarify activities that should be reported in a government's fiduciary funds. Such clarification would lead to greater consistency in fiduciary fund reporting. For special purpose governments, including business type activities (BTAs) such as public colleges and universities that currently do not report fiduciary activities, the proposal identifies pertinent fiduciary activities and addresses reporting requirements.

The Board's preliminary view is that a stand-alone BTA engaged in fiduciary activities, such as a public institution, has a fiduciary responsibility for financial reporting purposes. Further, the Board believes that a BTA's fiduciary activities should be reported in separate fiduciary fund financial statements as part of its basic financial statements.

The Board's preliminary view is that a government is a fiduciary and has a fiduciary responsibility when it controls assets (1) from a pass-through grant for which the government does not have administrative or direct financial involvement, (2) in accordance with a trust agreement or equivalent arrangement in which the government itself is not a beneficiary, or (3) for the benefit of individuals who are not required to be part of the citizenry as a condition of being a beneficiary, or organizations or other governments that are not part of the financial reporting entity (this could mean employees of a government or outside entities).

Further a government "controls assets" in a fiduciary capacity if those assets (1) are used by the government (or its assignee) to provide benefits to specified or intended beneficiaries and (2) have present service capacity that can be (a) used; (b) exchanged for another asset, such as cash; or (c) employed in any other way that provides benefits.

A government does not have control of assets if:

  • It is acting as a trustee for assets and only has responsibility for establishing parameters (e.g., providing a selection of investment options) for those that have the responsibility for administering the exchange of assets.
  • It is neither directly holding nor acting as a trustee for assets and only has responsibility for establishing parameters for those who are responsible for administering the exchange of assets.

The above "non-control" criteria will need to be more closely examined by higher education institutions that offer defined contribution pension plans and other similar arrangements for benefits. Community colleges with taxing authority will also need to pay attention to the definition of fiduciary activities and proposed reporting requirements.

GASB is offering several opportunities for its constituents to participate in roundtable exchanges on guidance proposed in the PV. Roundtable testimony will take place April 8-10, 2015, following the public comment due date of March 6, 2015. NACUBO encourages institutions to submit comments to GASB or send feedback to NACUBO for inclusion in the industry comment letter. 


Sue Menditto
Director, Accounting Policy