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Accounting for Fiduciary Activities

The objective of this proposed standard is to provide accounting and reporting guidance for fiduciary activities, and to differentiate them from Federal program activities. In many cases Federal non-fiduciary activities involve dedicated resources that are accounted for in accounts designated in the budget as “trust funds.” This has resulted in a lack of clarity about how Federal “trust funds” differ from private trust funds and other Federal funds, about the relationship between “trust fund” activity and Federal program expenditures, and about the relationship between “trust fund” accounting and the Federal Government's overall financial condition.

At the December 2004 meeting the Board considered the pros and cons for different reporting options and expressed a preliminary preference for reporting fiduciary activities in a note disclosure.

The Board asked staff to research how “deposit funds” are used by the cross-servicing payroll agencies as a temporary depository for state and local income taxes withheld from the payroll for Federal employees. At the next Board meeting, the Board will consider whether those funds should be excluded from the definition and/or reporting requirements for fiduciary activities.

The Board also asked staff to research other “deposit fund” activities, including those that had significant negative balances, and whether they were currently being included in Federal component financial statements, in compliance with current accounting standards.

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