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Unformatted text preview: CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES- AGENCY AND TRUST FUNDS OUTLINE Number Topic Type/Task Status (re: 12/e) Questions: 8-1 Distinction between agency and trust funds Distinguish 8-1 8-2 Purpose of fiduciary funds Explain 8-2 8-3 Agency funds and payroll issues Explain 8-3 8-4 No fund equity in agency funds Explain 8-4 8-5 Special assessment agency funds Describe 8-5 8-6 Tax agency fund fees Explain 8-7 8-7 Pass-through agency fund Define 8-8 8-8 Investment pools Describe 8-9 8-9 Defined benefit and contribution pension plans Describe 8-10 8-10 Defined benefit plan financial statements Explain 8-11 Case : 8-1 Fiduciary funds Mountain City Explain 8-1 8-2 Identification of fiduciary funds Explain New Exercises/Problems: 8-1 Examine the CAFR Examine 8-1 8-2 Various agency and trust fund issues Multiple Choice 8-2, 8-3 Revised 8-3 Various trust fund issues Multiple Choice 8-2, 8-3 Revised 8-4 Tax agency fund Compute 8-4 8-5 Tax agency fund Journal Entries 8-5 Revised 8-6 Special assessment agency fund JEs, FS 8-6 8-7 Pass-through agency fund JEs, FS 8-7 8-8 Investment trust fund Journal Entries 8-8 Revised 8-9 Defined benefit pension plan Calculate 8-9 8-10 Defined benefit pension plan statements Financial stmts 8-10 160 CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES AGENCY AND TRUST FUNDS Answers to Questions 8-1. Although in law there is a clear distinction between an agency relationship and a trust relationship, in practice the legalistic distinctions are not sufficient to classify funds as agency funds or trust funds . As the introduction to Chapter 8 explains, the name given the fund is not a reliable criterion for identifying the types of transactions in which the fund may engage. An aggregate of factors, such as the enactment that created the fund and pertinent regulations must be examined to determine the nature of the fund and the transactions in which it may engage. 8-2. Fiduciary funds are used to account for assets held by a governmental unit acting as a trustee or agent for individuals, organizations, or other governmental units. The use of fiduciary funds promotes accountability and demonstration of compliance with laws, regulations, and contractual agreements including the trust or agency. 8-3. No. Unless the use of an agency fund is mandated by law or by GASB standards, agency relationships may be accounted for within the funds from which the agency relationship arises. It is common practice, for example, to account for employee withholding taxes, retirement contributions, and social security taxes within the funds that account for the gross pay of the employees in this case, the General Fund. 8-4. All assets accounted for in an agency fund belong to the party or parties for whom the governmental unit acts as an agent, and not to the governmental unit itself. Thus, agency fund assets are offset by liabilities equal in amount and no fund equity exists....
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- Spring '10