As spring weather is upon us and talk of passing budgets is in full swing, implementation of GASB 84 – Fiduciary Activities is at the forefront of school district business officials’ minds.
Adoption of this standard, required for reporting of the June 30, 2021 fiscal year, after a one-year delay, clarifies the criteria used by school districts in identifying fiduciary activities. Although the scope of this statement includes component unit and post-employment benefit plan considerations, school districts are primarily impacted by two major types of transactions, new terminology, and additional financial statement presentation requirements.
Extra-Classroom Activity Funds (ECA)
Historically, Extra-Classroom Activity Funds (ECA Funds) have been reported in the Agency Fund within the fiduciary funds. Upon implementation of GASB 84, with extremely limited exceptions, ECA Funds will no longer be considered fiduciary in nature due to administrative involvement on the part of the school district that will require reporting these transactions as a governmental activity. The district should establish a Miscellaneous Special Revenue Fund (CM Fund) that will record both an asset and liability in the amount of funds held at fiscal year-end, as well as revenues and expenditures to represent the additions and deductions throughout the fiscal year.
NOTE: NYSED Guidance requiring a stand-alone audit of the ECA Funds will continue.
Payroll Related Withholdings
Payroll withholdings have historically been recorded in the Agency Fund. Upon implementation of GASB 84, these transactions will no longer qualify as fiduciary in nature based on the fact that the funds are not held in trust, are not for the benefit of another government or organization outside of the reporting entity, and the district has administrative involvement. As such, any amounts withheld and not yet remitted by the district as of fiscal year-end, should be recorded as a liability, at a minimum in the General Fund, with consideration given to the applicability and significance of payroll expenditures in other funds.
Terminology and Financial Statement Presentation Changes
GASB 84 will also require that the Agency Fund now be referred to as the Custodial Fund. Furthermore, contrary to the Agency Fund, which simply reported assets and liabilities, the Custodial Funds will now present a resource flow statement. This means, similar to the Trust Funds, the Custodial Funds will present additions and deductions.
Contact our Government experts today to further discuss your specific situation.
Other Resources:
- GASB 84 Implementation Guide: Implementation Guide No. 2019-2, Fiduciary Activities (gasb.org) (see paragraphs 4.15 through 4.26).
- November 2020 NYSOSC Bulletin on GASB 84 (see page 7).
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
