1. Fiduciary Funds n Used to account for funds held by Govt entity as a Trustee or Agent n Uses Accrual basis of accounting and Economic Resources measurement focus (2 Exceptions) n Only Fund Statements are prepared by Fund Type –Statement of Net Assets –Statement of Changes in Fiduciary Net Assets –Combining Statements

2. Categories of Fiduciary Funds n Agency: Assets held temporarily n Private-Purpose Trust: P and I held for benefit of individuals, organizations, or other governments (External) –Very similar to Permanent Funds, except may be expendable or non-expendable n Investment Trust Fund: Multi- government investment pool n Pension Trust Fund: Govt is the sponsor of post-employment benefit plan

3. Agency Funds n Nature of Fund –Assets held for one or more intergovernmental agencies on a temporary basis –Collect and disburse funds to other govt entities usually charging fees (1-3%) for efforts n Accounting Peculiarities –No Revenue, expenses or Net Assets (Exception Number 1 to accrual and economic resources) –Not a part of Government-wide financial reporting –Combining Statements reported in CAFR (p 183)

4. Private-Purpose Trust Funds n General –Set up by trust agreements as expendable or non-expendable; (Permanent funds are NE) –P and I benefit individuals, external governments, or private organizations (City or County Industrial Development Corporation) n Accounting and Reporting –Investments at FMV (GASB #31)

5. Investment Trust Funds n General –Government is the Sponsor of multi-government investment pool (State of Tennessee Investment Pool) Counties might have a similar pool – Internal Pools (Within the reporting govt entity:General Fund; Enterprise; Private-Purpose –External Pools (Multi-government reporting) Internal portion to various funds and external portion to various governments represented –Investments carried at FMV

6. Pension Trust Funds n Types of Plans –Single Employer –Multi-Employer n Agency: Each contributor-employer has a separate account and is responsible for keeping own contributions up-to-date n Cost Sharing: Separate accounts are not maintained so unfunded liabilities are made up on a total trust fund basis –Contributory: Employees contribute –Non-Contributory: Employer only contributes

7. Pension Trust Funds n Types of Plans, Continued –Defined Benefit: Retirement benefits are set before retirement begins (2% of average 5 year high salary for each year of service) n This is the type that is typically under-funded –Defined Contribution: Defines the amount of annual contribution only (6% of current salary) n Reporting Requirements –When PERS is part of reporting entity, must be included in CAFR

8. Pension Trust Funds n Reporting Requirements, Continued –When PERS is not a part of reporting entity, it is not included in CAFR –So, Tennessee Consolidated Retirement System is reported in State CAFR, but TIAA-CREF participation is not, even though the State contributes to it on behalf of its employees n Financial Statements –Statement of Net Assets –Statement of Changes in Net Assets

9. Pension Trust Funds n Schedules for Defined Benefit Plans –Schedule of Funding Progress –Schedule of Employer Contributions n Notes to Financial Statements –Defined Benefit Plans: Much more information is required to be disclosed –Defined Contribution Plans: Not as much information is required –See pp 192-193