GASB 84 Implementation

April 26th, 2021 • Blog

Scott C. McIntire, CPA

Are you a government that opted to defer implementation of Governmental Accounting Standards Board Statement (GASB) 84, Fiduciary Activities? You may still have work to do! GASB 84 establishes Custodial Funds and eliminates Agency Funds, among other things, which may change your December 31, 2020 or June 30, 2021 financial statements.

What are Custodial Funds?

Custodial Funds, a type of Fiduciary Fund, are used to report fiduciary activities that are not required to be reported in pension and other post-employment benefit trust funds, investment trust funds, or private-purpose trust funds. Custodial Funds, in general, are used to report amounts that a government has custody of, but 1) is not the government’s own-source revenue, and 2) the government does not have administrative involvement. In general, own-source revenues are revenues that are generated by the government itself, and a government has administrative involvement if it controls the use of the revenues. To properly implement GASB 84, detailed definitions of own-sourced revenue and administrative involvement must be understood, which can be found within GASB 84 itself.

Examples of Custodial Funds include amounts held by a government because it bills and collects taxes and/or fees on behalf of another government. Most often, the inflow and outflow of these collections have been accounted for within balance sheet accounts in a general fund or agency fund. GASB 84 now requires the inflow and outflow of these collections be reported as Additions and Deductions (similar to Revenues and Expenditures) in a Custodial Fund. The collecting government is essentially providing a service by billing and collecting monies for another government and, as a result, the monies associated with this activity are not the collecting government’s own-source revenue and the collecting government cannot control the use of those resources.

What do I do with Agency Funds?

With the elimination of Agency Funds, governments must evaluate each agency fund and determine where the activity should be reported based on existing guidance, most notably GASB 54 and 84. The receipt and disbursement of funds related to police detail work have often been reported in an Agency Fund. GASB 84 now requires these funds be reported in a Special Revenue Fund, since this revenue is the government’s own-source revenue, and the government controls the use of the revenues collected. GASB’s Implementation Guide No. 2019-2, Fiduciary Activities, is a must read! It includes excellent questions and answers that provide very clear guidance in determining where Agency Fund activity should now be reported. Most activity previously reported in Agency Funds will now be reported in either the General Fund, Special Revenue Funds, or Custodial Funds.

Student Activity Funds

Perhaps the most challenging question about implementing GASB 84 is where do Student Activity Funds go? Governments will need to look to its existing Student Activity Fund policies and procedures to determine if these funds are 1) the government’s revenue or the student’s revenue, and 2) if the government controls the use of the funds. A significant portion of GASB’s Implementation Guide No. 2019-2, Fiduciary Activities, addresses Student Activity Funds.

When GASB 84 was originally issued, some governments were concerned that certain deferred compensation plans (i.e., 457 and 403b plans) were now required to be reported as a Fiduciary Fund. GASB 97 was issued in June 2020, which eliminated much of that concern. GASB 97 includes clarification that most deferred compensation plans do not meet the GASB definition of a Fiduciary Fund. Governments should review the 12 paragraphs that comprise GASB 97 to ensure excluding these activities is appropriate.

You may be wondering what should I do now? Do not wait any longer! Begin the process now of evaluating your government’s funds and how GASB 84 may impact your financial statements. GASB 84 is one of the most complex standards issued in past years and we’re here to help.

If you have any questions about the standards or how to implement, please contact your Melanson audit team or reach out to us at

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