Cpa Review- Far 8-5 (Fiduciary Funds)

Front 1

Pension (And Other Employee Benefit) Trust

Back 1

-Accounts for government sponsored defined benefit and defined contribution plans and other employee benefit plans such as post retirement health care benefits.

Hint 1

-B/S: Statement of Plan Assets
-I/S: Statement of Changes in Plan Net Assets
-No Statement of CF's

Front 2

Revenue Sources & Expenses

Back 2

1. Employer and Employee Contributions- Restricted Account: DR. Cash, CR. Additions: employer contribution-restricted
2. Other Fund Transferring Money: GRaSPP fund (modified accrual)- DR. Expenditure, CR. Cash.

Hint 2

*SE-PAPI fund (full accrual)- DR. Expense, CR. Cash.
-Income from investments recorded as revenue.
-Expenses of pension trust funds frequently include benefits payments, refunds, and administrative expenses.

Front 3

Unique Accounting Issues

Back 3

1. Full Accrual: no budget, no encumbrances.
2. Annual Cost: annual pension cost is equal to the employer's annual required contribution (ARC) to the plan w/ certain adjustments if the employer has a net obligation for past under- or over-contributions.

Hint 3

3. Basis of Accounting: economic resources measurement focus. Capitalize fixed assets, record depreciation expense. Carry LTD and pay both principal and interest.

Front 4

Financial Statements

Back 4

1. Statement of Plan Fiduciary Net Assets: net assets (investments) are reported on a FV basis.
-Net assets - liabilities typically reported "Net Assets: Held in trust for pension benefits and purposes."*
*Not fund balance

Hint 4

2. Statement of Changes in Plan Net Assets: Additions = contributions, appreciation (depreciation), realized and unrealized gains and losses, premiums and discounts on debt securities (not amortized). Deductions = pension benefit payments to retirees and beneficiaries and administrative expenses. Additions + Deductions = Change in Net Assets.

Front 5

Notes to the F/S's

Back 5

1. Plan description, summary of accounting policies, contributions and reserves, risk concentrations.
2. Other Post-Employment (OPEB) Plans: described by GASB 43, reporting requirements are nearly identical to pension reporting.

Hint 5

3. Required Supplementary Information: a schedule of funding progress and or employer contributions (for past 6 fiscal years of plan) and notes to support the two schedules. Measurement information should be based on actuarial valuation performed at least once every two years.

Front 6

Agency Trust Fund

Back 6

-Collects cash to be held temporarily for an authorized recipient to whom it will be later disbursed. Recipient may be another fund or some individual or firm or even a government outside of the government.

Hint 6

-Ex's: tax collection funds, clearance funds, special assessments.
-No I/S and no Statement of CF's. Has a B/S (Statement of Fiduciary Net Assets.
-Acts as a mailman. Called a brain dead fund.

Front 7

Unique Accounting Issues

Back 7

-Revenues and expenses are not recognized in agency funds.
1. Tax Collection Funds: exist when one local government collects a tax for an overlapping governmental unit and remits the amount collected, less administrative charges, to the recipient unit.*
*Ex's: Sales tax agency fund, payroll withholding agency fund, real estate taxes agency fund.
-*To record the county collection and a retaining of a fee (%): DR. Cash, CR. Due to other units (towns), CR. Due to county fund (b/c they cannot record revenue, simply pass it off).

Hint 7

2. Clearance Funds: used to accumulate a variety of revenues from different sources and apportion them to various operating funds. A Cash Conduit Arrangement (no monitoring), examples are food stamps, traffic citations (If governmental unit has monitoring or eligibility, special revenue fund is used).
3. Special Assessments: when governmental unit is "not otherwise obligated" for the debt (not liable), the receivables and debt service transaction are recorded here (if liable, reported under capital project and debt service funds).

Front 8

Financial Statements

Back 8

-Do not use a statement of revenues and expenses. Statement of changes in assets a liabilities is prepared but no fund balance b/c current assets must equal current liabilities.

Hint 8

-Statement of Fiduciary Net Assets: no year-end balance, current assets = current liabilities.

Front 9

Private Purpose Trust

Back 9

-(= not general public use) designated fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following:

Hint 9

-Specific individuals, private organizations, other governments.
-Ex's: escheat property fund, other trusts.
-No statement of CF's required.

Front 10

Revenue Sources and Expenses

Back 10

1. Revenue Sources: the income from the principal of a private purpose trust may be placed with another fund. DR. Interfund Transfer, CR. Due to. Then DR. Due to, CR. Cash.

Hint 10

2. Expense Types: related to specific purpose of trust and may relate to benefits or administrative charges. Capital Gains (losses) are recorded as adjustments to fund principal and not to income, unless the grantor specified otherwise.

Front 11

Unique Accounting Issues

Back 11

-Escheat property is property that reverts to a governmental entity in the absence of legal claimants or heirs at the time the estate is settled. Generally should be reported as an asset in the governmental or proprietary fund to which the property ultimately escheats.

Hint 11

1. Revenue is reduced and a fund liability is reported to the extent property will probably be reclaimed.
2. Transfers to other funds are "operating transfers."
3. Advances to/from occur if assets are less than the liability to future claimants.

Front 12

Investment Trust Funds

Back 12

-"Accounting and Financial Reporting for Certain Investments and for External Investment Pools" (GASB 31) established that a governmental entity that sponsors one or more

Hint 12

investment pools (sponsoring government) should report the external portion of each pool as a separate investment trust fund.
-For most part, plan's net assets (investments) are reported at FV.

Front 13

Financial Statements

Back 13

1. Statement of Fiduciary Net Assets: reported liabilities subtracted from total assets and difference reported as "net assets held in investment trust."

Hint 13

2. Statement of Changes in Fiduciary Net Assets: reports net increase or decrease in plan assets during year.
-Statement of CF's not required.