Fiduciary fund definition

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What is a Fiduciary Fund?

A fiduciary fund is a governmental fund used to account for resources that a government holds for the benefit of parties outside the government itself. These resources cannot be used to support the government’s own programs. Fiduciary funds commonly include pension trust funds, investment trust funds, private-purpose trust funds, and custodial funds. The government acts as a trustee or custodian, managing the assets according to legal or contractual requirements. Because the assets belong to others, fiduciary funds are excluded from government-wide financial statements under GASB reporting rules.

Presentation of Fiduciary Funds

When financial statements are prepared for fiduciary funds, they are presented using the economic resources measurement focus and the accrual basis of accounting. The required financial statements for a fiduciary fund are the statement of fiduciary net position and the statement of changes in fiduciary net position.

Which Funds are Classified as Fiduciary Funds?

The fiduciary funds classification includes the following funds:

  • Agency funds. Used to report on resources held in a custodial capacity, where funds are received, temporarily invested, and remitted to other parties. Examples of agency funds include a school district collecting and holding property taxes on behalf of local governments, a county treasurer administering funds for special assessments, or a state agency managing payroll withholdings for employees.

  • Investment trust funds. Used to report the external portion of an investment pool that is reported by the sponsoring government.

  • Pension and employee benefit trust funds. Used to report on assets held in trust for pension plans, other post-employment benefit plans, and employee benefit plans.

  • Private-purpose trust funds. Used to report on trust arrangements where the individuals, private organizations, and other governments are the beneficiaries. An example is a trust established to provide financial aid to low-income students at a specific school.