What: In January 2017, the Governmental Accounting Standards Board issued Statement No. 84, Fiduciary Activities (“GASB 84”), which improves guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. For charter schools, GASB 84 will affect whether student activities funds are still considered a fiduciary activity.
When: GASB 84 is required to be adopted by charter schools in fiscal year 2021.
Why: The requirements of GASB 84 are intended to enhance the consistency and comparability of financial reporting, which improves the value provided by the information reported in financial statements for assessing government accountability and stewardship.
How: GASB 84 defines fiduciary activities as assets held for the benefit of other individuals where a governmental entity does not have administrative involvement with the assets or direct financial involvement with the assets. The criteria for determining administrative or direct involvement with the assets includes a governmental entity who does the following:
- Monitors compliance with the requirements of the activity that are established by the government.
- Determines eligible expenditures that are established by the government.
- Has the ability to exercise discretion over how assets are allocated.
That explanation didn’t help you decide if your student activities funds are a fiduciary activity, did it? This is what the new criteria mean:
- If school, district or state policy, or an employee of one of those entities, determines the fees to be charged or accepts, rejects, modifies the usage of funds, student activities funds are not a fiduciary activity.
- If school, district or state policy, or an employee of one those entities, only determines who the authorized check signer will be and prohibits using funds for illegal activities, student activities funds are a fiduciary activity.
- If the student club president or club members determine how club funds will be spent and approves disbursements, even if a school employee has to sign the check, student activities funds are a fiduciary activity.
Reporting: Previously, student activities funds were separately reported on a fiduciary balance sheet, mainly as an asset and a liability. If student activities funds are still considered to be a fiduciary activity, they will now be separately reported in a fiduciary balance sheet, but mainly as an asset and equity. A fiduciary income statement is also now required. These aren’t the official statement names, but everyone should understand the changes. If student activities funds are no longer considered to be a fiduciary activity, they will now be combined and reported along with the rest of the school’s governmental activities.
Have questions? Please contact us.
Nick Adams, CPA
Senior Audit Director | BKHM, PA407.998.9000