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Susan Combs•Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Governmental Reporting Overview
Fiduciary Funds

Fiduciary fund reporting focuses on net position and changes in net position. Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government’s own programs. Resources held in trust for the benefit of the agency’s own programs or Texas citizenry are accounted for in a governmental fund rather than a fiduciary fund. The fiduciary fund category includes:

  • Agency funds (FT 09)
  • Pension and other employee benefit trust funds (FT 10)
  • External investment trust funds (FT 18)
  • Private-purpose trust funds (FT 20)

The three types of trust funds are used to report resources held and administered by the agency when it is acting in a fiduciary capacity for individuals, private organizations or other governments. Generally, these funds are distinguished from agency funds by the existence of a trust agreement that affects the degree of management involvement and the length of time the resources are held.

Financial statements used to present fiduciary fund financial information include:

  • Statement of fiduciary net position
  • Statement of changes in fiduciary net position (except agency funds)
  • Statement of changes in assets and liabilities (agency funds only)

In these statements, provide a separate column for each fiduciary fund type (combined statement) and fund (combining statement). Use the economic resources measurement focus and the full accrual basis of accounting, except for the recognition of certain liabilities of defined benefit pension plans and certain post-employment healthcare plans. GASB 34 excludes the reporting of fiduciary activities in the government-wide financial statements.

Agency Funds (FT 09)

Agency funds are used to report resources held by the agency in a purely custodial capacity (assets held for others that cannot be used to support the agency’s own programs). Agency funds typically involve only the receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations or other governments. GAAP requires the use of an agency fund to account for debt service transactions involving special assessment debt for which the state is not obligated in any manner.

Assets must equal liabilities in the statement of fiduciary net position. Agency funds are required to use the statement of changes in assets and liabilities rather than the statement of changes in fiduciary net position (as agency funds do not recognize revenues, expenditures or expenses). The statement of changes in assets and liabilities reports beginning balances, additions, deductions and ending balances. Do not report agency funds in the statement of changes in fiduciary net position.

When an agency fund is used as a clearing account, any assets held in the agency fund (at the reporting date) that are pending distribution to other funds are not reported in the agency fund. These assets are reported in a governmental or proprietary fund as appropriate.

If FT 09 GAAP fund 0900 (the departmental suspense fund) is used as a clearing account to distribute financial resources to other funds of the agency, the portion of the balance that belongs in other funds is not reported in fund 0900. If there are material cash balances belonging to the state, reclassify the amounts out of fund 0900 and record in the appropriate fund type. See Reclassing Material Cash Balances That Remain in Suspense Fund FT 09 at Fiscal Year-End. Funds being held in fund 0900 for an outside entity (such as a city or county government or a private individual) or for another agency will remain in the agency fund.

Pension and Other Employee Benefit Trust Fund (FT 10)

Pension and other employee benefit trust funds are used to report resources required to be held in trust for the members and beneficiaries of:

  • Defined benefit pension plans
  • Defined contribution plans
  • Other postemployment benefit plans
  • Other employee benefit plans

GAAP requires the use of separate trust funds for each individual pension plan.

External Investment Trust Fund (FT 18)

GASB 31 requires the reporting of the state’s external investment pool funds. The sponsoring government of an external investment pool is required to report the external portion of each pool as a separate investment trust fund (a fiduciary fund).

GASB 31 defines an external investment pool as an arrangement that commingles (pools) the monies of more than one legally separate entity and invests on the participants’ behalf in an investment portfolio. One or more of the participants must not be part of the sponsor’s reporting entity. An external investment pool can be sponsored by one of the following:

  • An individual government
  • More than one government jointly
  • A nongovernmental entity

An investment pool sponsored by an individual state or local government is an external investment pool if it includes participation by a legally separate entity that is not part of the same reporting entity as the sponsoring government. If a government-sponsored pool includes only the primary government and its component units, it is an internal investment pool — not an external investment pool.

Private-Purpose Trust Fund (FT 20)

Private-purpose trust funds report all other trust arrangements under which the principal and income benefits individuals, private organizations or other governments.

Escheat property held for individuals, private organizations or another government may be reported in a private-purpose trust fund, or in a governmental or proprietary fund.

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Susan Combs
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.state.tx.us
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