Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

CHAPTER 8:

ACCOUNTING FOR FIDUCIARY ACTIVITIES AGENCY AND TRUST FUNDS

OUTLINE

Number )ue"$io*": 8-1 8-! 8-& 8-) 8-+ 8-/ 8-0 8-8 8-1 8-10 C!"e"3 8-1 8-! 8-&

Topic Distinction between agency and trust funds "dentifying trust funds and their purpose 'ension p%an state ents and disc%osures (o fund e*uity in agency funds Agency funds for ,pass-through- funds "nvest ent poo%s "nvest ent gains in invest ent trust funds 'rivate and pub%ic purpose trusts #va%uating pension p%ans Accounting for pension e$penses2e$penditures "nternet Case - '#4S 6'#7 '%ans 'o%icy "ssues 4e%ating to # p%oyee 'ension '%ans

Type T!"# Distinguish #$p%ain #$p%ain #$p%ain Define. e$p%ain #$p%ain #$p%ain Distinguish #$p%ain #$p%ain 5ocate. e$p%ain Ana%y8e Ana%y8e

S$!$u" %re: &' e( Sa e Sa e (ew Sa e Sa e Sa e (ew Sa e Sa e (ew Sa e Case 8-& (ew

E+erci"e" Prob,em": 8-1 #$a ine the CAF4 8-! 9arious agency and trust fund issues 8-& 9arious agency and trust fund issues 8-) Ta$ agency fund 8-+ Specia% assess ent agency fund 8-/ "dentification of fiduciary funds 8-0 "nvest ent trust fund 8-8 Defined benefit pension p%an 8-1 Defined benefit pension p%an state ents 8-10 Fiduciary financia% state ents

#$a ine :u%tip%e Choice :u%tip%e Choice ;ourna% entries ;#s. ana%ysis Ana%ysis ;ourna% entries Ca%cu%ate Financia% state ents Ana%ysis

Sa e 8-! revised 8-& revised Sa e (ew Case 8-! 8-0 revised Sa e 8-1 revised 8-10 revised

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

CHAPTER 8:
Answers to <uestions 8-1=

ACCOUNTING FOR FIDUCIARY ACTIVITIESAGENCY AND TRUST FUNDS

A%though in %aw there is a c%ear distinction between an agency re%ationship and a trust re%ationship. in practice the %ega% distinctions are not sufficient to c%assify funds as agency funds or trust funds= A%% factors. such as the enact ent that created the fund and pertinent regu%ations. ust be e$a ined to deter ine the nature of the fund and the transactions in which it ay engage= >enera%%y. trust funds are ore co p%icated than agency funds. re*uiring greater representation and deve%op ent of the beneficiary?s interest= There are any different types of trust funds= For reporting purposes the >AS7 c%assifies trust funds as invest ent trusts. private-purpose trusts. and pension trusts @a%so referred to as pension and other e p%oyee benefit trustsA= An invest ent trust fund is used to account for and report the fund e*uity in poo%ed invest ents he%d by fund participants who are external to the govern ent operating the fund= 'rivate-purpose trust funds record and report principa% and2or interest anaged by a govern ent for the benefit of an individua%. private organi8ation. or another govern ent= The distinguishing characteristic is that the party benefiting fro the trust ust be e$terna% to the govern ent operating the trust= "n pension and other e p%oyee benefits trusts a govern ent is anaging benefits that be%ong to govern ent e p%oyees= As can be seen. in each case the govern ent is acting as a fiduciary. or in the best interest of parties outside the govern ent= The >AS7 standards re*uire two financia% state ents @a state ent of p%an net position and a state ent of changes in p%an net positionA and two schedu%es of historica% trend infor ation @a schedu%e of funding progress and a schedu%e of e p%oyer contributionsA for pension financia% reporting= "n addition. notes to the financia% state ents and notes to the re*uired schedu%es disc%ose a nu ber of descriptive ite s. inc%uding a p%an description. a su ary of significant accounting po%icies. and description of contributions and reserves= Bhen an agency fund is used to account for assets. the assets be%ong to the party or parties for who the govern ent acts as an agent. and not to the govern ent itse%f= Thus. agency fund assets are offset by %iabi%ities e*ua% in a ount and no fund e*uity e$ists= A pass-through agency fund is one wherein a %eve% of govern ent @such as the state govern entA serves as an inter ediary. transferring resources to another %eve% of govern ent @such as %oca% govern entA= For a pass-through agency fund to be appropriate the govern ent acting as the conduit ust have no ad inistrative or direct financia% invo%ve ent= "f the pass-through govern ent provides onitoring. is invo%ved in deter ining e%igibi%ity of fund recipients or progra s. has discretion in a%%ocating funds. or finances so e direct progra costs a pass-through agency fund is not appropriate=

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8-)=

8-+=

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

8-&

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

Ch= 8. Answers @ContCdA

8-/=

Bith an interna% invest ent poo% the poo% participants are a%% within the sa e govern ent= Bhi%e accounting for an interna% invest ent poo% often occurs in an agency fundD for e$terna% financia% reporting purposes each participant reports its proportionate share of the poo%ed assets and %iabi%ities= The agency fund of an interna% invest ent poo% is not reported in e$terna% financia% state ents= The accounting for an e$terna% invest ent poo% differs in the type of fund used and the anner in which the poo%?s assets and %iabi%ities are reported= An e$terna% invest ent poo% is reported in an invest ent trust fund and has participants that are outside the govern ent ad inistering the invest ent poo%= As such. the >AS7 standards re*uire that a trust fund be used to account for the invest ent poo%?s resources= #$terna% participants? shares of net position of the fund and additions to and deductions fro net position are reported in the invest ent trust fund= Those participants have no c%ai s on specific assets of the trust=

8-0=

The >AS7 standards re*uire that rea%i8ed and unrea%i8ed gains and %osses be reported in aggregate as ,Change in Fair 9a%ue of "nvest ents.- which is a co ponent of invest ent inco e= Bhi%e gains and %osses are not reported as separate a ounts in the financia% state ents. they ay be disc%osed in the notes to the financia% state ents. if desired= >overn ents ay aintain a separate Allowance for Changes in Fair Value of Pooled Investments account @a contra-asset accountA to record a%% changes in fair va%ue rather than increasing and decreasing the ba%ance of the invest ent accounts= The beneficiaries of a private purpose trust are individua%s. organi8ations. or govern ents other than the govern ent ad inistering the trustD whereas. the beneficiary of a pub%ic purpose trust is the govern ent ad inistering the trust= Since the beneficiary of the private purpose trust is outside the ad inistering govern ent. the ad inistering govern ent has a fiduciary responsibi%ity to the beneficiary and as a resu%t the private purpose trust is reported as a private-purpose trust fund= A pub%ic purpose trust is genera%%y reported as either a per anent fund @i=e=. the principa% ust re ain intactA or a specia% revenue fund @i=e=. the inco e and2or principa% ay be spent for a specified purposeA= Three indicators that are usefu% in assessing the financia% hea%th of a pension p%an are the unfunded actuaria% accrued %iabi%ity. the funded ratio. and the difference between the re*uired contribution and the a ount actua%%y contributed= "nfor ation about the unfunded actuaria% accrued %iabi%ity and the funded ratio can be found on the schedu%e of funding progress= "f the unfunded actuaria% accrued %iabi%ity is growing or the funded ratio is decreasing over ti e it indicates that sufficient resources are not being provided to cover the benefits earned by e p%oyees= The schedu%e of e p%oyer contributions

8-8=

8=1=

8-)

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. Answers. 8-1 @ContCdA

provides infor ation on the percentage of the re*uired contribution that has actua%%y been contributed to the p%an= "f actua% contributions are not Eeeping pace with the re*uired contributions the p%an?s actuaria% accrued %iabi%ity wi%% continue to grow= Thus. the two re*uired schedu%es provide usefu% infor ation in assessing the financia% hea%th of a pension p%an= The hea%th of a p%an is best deter ined by %ooEing at the trend in the infor ation rather than %ooEing at a sing%e year= 8=10= A govern ent e p%oyer reports pension e$penditures in a govern enta% fund on the odified accrua% basis of accounting= Thus. the a ount recogni8ed wi%% be the actua% a ount contributed to the p%an during the year regard%ess of pension cost= "n proprietary funds and in the govern enta% activities Fourna% at the govern ent-wide %eve%. e p%oyers wou%d recogni8e the pension cost on the accrua% basis= Therefore. if the a ount contributed to the pension fund for the year is %ess than the annua% pension cost. the difference shou%d be added to net pension ob%igation @('6A= "f the contribution is greater than the annua% pension cost. the difference shou%d be deducted fro the ('6=

So%utions to Cases 8-1= a= Ca%'ers was estab%ished by state %aw in 11&!= b. A% ost a%% types of state and %oca% govern ent e p%oyers contribute to Ca%'#4S. inc%uding state agencies. cities. specia% purpose govern ents. and schoo%s= c= 6ver 1=/ i%%ion Ca%ifornia pub%ic e p%oyees. retirees. and their fa i%ies are served by Ca%'#4S= d. Ca%'#4S ad inisters 1+ funds3 0 pension trust funds) of which are for defined benefit p%ans and & of which are for defined contribution p%ans= 1 6'#7 fund= & agency fundsan o%d age survivors fund. a specia% deposits fund for ear arEed funds. and a contingency reserve fund for hea%th care pay ents and re ittances= ) proprietary fundsone %ong-ter care fund. one deferred co pensation fund. and two hea%th care funds= e= The tota% va%ue of fiduciary assets wi%% vary with the ost recent financia% report= The infor ation can be obtained fro the state ent of fiduciary net position= f. The change in pension fund net position wi%% vary with the ost recent financia% report= The infor ation can be obtained fro the state ent of changes in pension net position= @4eca%% that agency and proprietary fund infor ation wou%d not be reported on a state ent of changes in fiduciary net position=A g. 4efer to the ost recent financia% report?s re*uired supp%e entary infor ation G schedu%e of funding progress= Funding ratios vary great%y by p%an and year= For so e of the ti e periods reported. you wi%% find a funded ratio greater than 100H. whi%e other ratios are uch %ess than 100H= A ratio %ess than 100H indicates that the actuaria% va%ue of the %iabi%ities is greater than the actuaria% va%ue of the assets. resu%ting in an under funded pension as of the va%uation date=

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

Ch= 8. So%utions. Case 8-1 @ContCdA

h. Ca%'#4S is a fiduciary co ponent unit of the State of Ca%ifornia= Thus. it is b%ended with other pension financia% infor ation in the state?s state ent of fiduciary net position and state ent of changes in fiduciary net position. and is not reported at a%% in the govern ent-wide financia% state ents= 8=!= Fo%%owing are answers based on the !010 fisca% year CAF4s for the City and County of Denver and (ew IorE City= The answers to the *uestions wi%% vary with the year of the CAF4s e$a inedD therefore. the answers provided serve as a guide to what shou%d be considered in the ana%ysis= a. For !010 the D#4' Jea%th 7enefits p%an AA5 was K1)1./)&.000= 6ver the period fro !008 to !010 the funded ratio has so ewhat dec%ined= There was about a / percent dec%ine fro !008 to !001. and since that ti e the funded ratio had a net dec%ine of about +=) percent= "f the D#4' Jea%th 7enefits p%an is co pared to the D#4' @which is the pension p%anA we see that the pension p%an is better funded than the Jea%th 7enefits '%an= The funded ratio for the pension has ranged fro 88=) percent to 18=! percent during the four year ti e period. whi%e the Jea%th 7enefits '%an has ranged fro /&=8 percent to 0+=0 percent= b. The ost recent year for which the AA5 was ca%cu%ated @!000A indicates a %iabi%ity of K/!.1&+.)+&.000 for the (ew IorE City Jea%th 7enefits '%an= For the sa e ti e period the funded ratio is )=! percent= 6ver the period fro !00+ to !000 the funded ratio ranged fro 0 to )=! percent= c. 7ased on the data avai%ab%e. it wou%d appear that Denver has funded a re%ative%y greater percentage of its hea%th benefit p%an than (ew IorE City= As a resu%t. the future financia% burden and cost re%ated to the current%y earned benefits ay not be as great for Denver as for (ew IorE City= The si8e of the progra s and econo ic factors a%so p%ay a ro%e in each city?s abi%ity to fund its p%ans= a. As defined on the issue brief?s website. defined benefit p%an provides govern enta% e p%oyees with %ifeti e retire ent inco e based upon years of service and fina% average sa%ary= Defined contribution p%ans are si i%ar to individua% retire ent savings accounts where the invest ents are se%ected by the e p%oyee fro a %ist of options provided by the p%an= The benefit at retire ent depends on the va%ue in the e p%oyee?s account= Lnder a defined benefit p%an. the govern ent G hence ta$payers G bear responsibi%ity for future benefit pay ents. as we%% as arEet and inf%ation risE= Defined contribution p%ans shift a%% the risE and responsibi%ities fro the e p%oyer to the e p%oyee= A hybrid p%an co bines e%e ents of both defined benefit p%ans and defined contribution p%ans= They are intended to spread the risEs associated with the pension pay ents between the e p%oyer and the e p%oyee= "n so e cases e p%oyees are re*uired to participate in both a defined benefit and a defined contribution p%an=

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

Ch= 8. So%utions. Case 8-& @ContCdA

b. Bhen eva%uating whether to shift fro a defined benefit to a defined contribution p%an or to a hybrid p%an. a govern ent shou%d consider risEs. costs. and hu an resource goa%s= #ach of these factors invo%ves the govern ent. govern enta% e p%oyees. and ta$payers= c. In 2011, 38 states offered a mandatory defined benefit plan, two states had a mandatory defined contribution plan, six allowed a choice, and four allowed for hybrid plans. Georgia, Michigan, and Utah recently introduced a mandatory hybrid plan. d. #ach student?s e o shou%d identify and support a position on the proposed change= "n eva%uating each student?s perfor ance on this case. we reco end p%acing ore weight on the *ua%ity and depth of ana%ysis than on the student?s fina% conc%usion= So%utions to #$ercises and 'rob%e s 8=1= 8-!= #ach student wi%% have an annua% report fro a different govern ent unitD therefore. the answers to these *uestions wi%% differ fro student to student= 1= != &= )= += 1= != &= )= += a= b= a. d= c= d. a. d. c. b. /= 0= 8= 1= 10= /= 0= 8= 1= 10= b. d. a= d. c. c= b= b. a. c=

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @ContCdA

8-4. a.

LINCOLN COUNTY TAX AGENCY FUND GENERAL JOURNAL Debits Credits TAXES RECEIVA LE FOR OT!ER FUNDS AND GOVERN"ENTS CURRENT DUE TO OT!ER FUNDS AND GOVERN"ENTS 1#$%&&$&&& 1#$%&&$&&& 8$4&&$&&& 8$4&&$&&& 8$4&&$&&& 1$414$()& %$%4($'%& '$8%($')& ,14$#)& T.0es C122e3ted < 1$'44$&&& < %$%)8$&&& < '$8)4$&&& < ,%4$&&& 14 Fee = #&$()& - %%$)8& - '8$)4& - ,$%4& A5e6378s Li.bi2it7 1$414$()& %$%4($'%& '$8%($')& ,14$#)&

1.

%.

CAS! TAXES RECEIVA LE FOR OT!ER FUNDS AND GOVERN"ENTS CURRENT

'.

DUE TO OT!ER FUNDS AND GOVERN"ENTS DUE TO COUNTY GENERAL FUND DUE TO TO*N OF S"IT!TON DUE TO LINCOLN COUNTY CONSOLIDATED SC!OOL DISTRICT DUE TO VARIOUS TO*NS!I+S

S-.res/ C196t7 T1>6 S3-112 T1>6s-i?s 4.

CO"+UTATION %$#(%$&&&:1#$%&&$&&& ; 8$4&&$&&& 4$)44$&&&:1#$%&&$&&& ; 8$4&&$&&& #$,1%$&&&:1#$%&&$&&& ; 8$4&&$&&& 1$8,%$&&&:1#$%&&$&&& ; 8$4&&$&&&

DUE TO COUNTY GENERAL FUND DUE TO TO*N OF S"IT!TON DUE TO LINCOLN COUNTY CONSOLIDATED SC!OOL DISTRICT DUE TO VARIOUS TO*NS!I+S CAS!

1$414$()& %$%4($'%& '$8%($')& ,14$#)& 8$4&&$&&&

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions. 8-) @ContCdA

b.

LINCOLN COUNTY GENERAL FUND GENERAL JOURNAL TAXES RECEIVA LE CURRENT REVENUES Debits %$#(%$&&& Credits 8%$()& %$)),$44& 1$414$()& 1$'44$&&& #&$()&

1.

ESTI"ATED UNCOLLECTI LE CURRENT TAXES

%.

CAS! TAXES RECEIVA LE CURRENT REVENUES @COLLECTION FEESA

c.

TO*N OF S"IT!TON GENERAL FUND GENERAL JOURNAL TAXES RECEIVA LE CURRENT REVENUES 4$)44$&&& 1',$'%& 4$(&4$)8& %$%4($'%& %%$)8& %$%)8$&&&

1.

ESTI"ATED UNCOLLECTI LE CURRENT TAXES

%.

CAS! EX+ENDITURES @COLLECTION FEESA TAXES RECEIVA LE CURRENT

d.

T-e t.0 .5e637 B96d 3.6 ?re?.re . st.teCe6t 1B t.0 .5e637 B96d 6et ?1siti16 reB2e3ti65 t-e .sset .6d 2i.bi2it7 b.2.63es 1B t-e B96d. Additi16.227$ t-e B96d >192d be 31Cbi6ed >it- .67 1t-er .5e637 B96ds t-.t Li63126 C196t7 -.s .6d t-e t1t.2 1B t-e .ssets .6d 2i.bi2ities B1r t-e .5e637 B96ds >192d be s-1>6 i6 . si652e .5e637 B96d 3129C6 16 t-e st.teCe6t 1B Bid93i.r7 6et ?1siti16.

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @ContCdA

8-(. a. Si63e t-e 3it7 is ?r1Didi65 .dCi6istr.tiDe serDi3es B1r debt B1r >-i3- it -.s 61 2e5.2 1b2i5.ti16$ t-e GAS st.6d.rds i6di3.te t-e serDi3es s-192d be .33196ted B1r 9si65 .6 .5e637 B96d. b. LOCAL I"+ROVE"ENT DISTRICT FUND GENERAL JOURNAL Debits (&&$&&& 4$(&&$&&& Credits

1.

ASSESS"ENTS RECEIVA LE CURRENT ASSESS"ENTS RECEIVA LE DEFERRED DUE TO S+ECIAL ASSESS"ENT OND!OLDERS +RINCI+AL

($&&&$&&& #(&$&&& (&&$&&&

%.

CAS! ASSESS"ENTS RECEIVA LE CURRENT DUE TO S+ECIAL ASSESS"ENT OND!OLDERS INTEREST ASSESS"ENTS RECEIVA LE CURRENT ASSESS"ENTS RECEIVA LE DEFERRED

%(&$&&&

(&&$&&& (&&$&&&

'.

DUE TO S+ECIAL ASSESS"ENT OND!OLDERS +RINCI+AL DUE TO S+ECIAL ASSESS"ENT OND!OLDERS INTEREST CAS! %(&$&&& #(&$&&& (&&$&&&

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

Ch= 8. So%utions. 8-+ @ContCdA

c.

Assets .6d 2i.bi2ities 1B t-e s?e3i.2 .ssessCe6t .5e637 B96d >192d .??e.r i6 . se?.r.te 3129C6 16 t-e st.teCe6t 1B Bid93i.r7 6et ?1siti16 b9t >i22 .??e.r i6 61 1t-er b.si3 Bi6.63i.2 st.teCe6ts. IB t-ere .re seDer.2 .5e637 B96ds$ F11t-i22s C.7 1?t t1 ?r1Dide . 31Cbi6i65 st.teCe6t 1B .5e637 B96ds i6 its CAFR. T-e 31Cbi6i65 st.teCe6t >192d dis?2.7 t-e .ssets .6d 2i.bi2ities B1r e.3- .5e637 B96d i6 . se?.r.te 3129C6.

d.

Si63e t-e Cit7 1B F11t-i22s is 61t 1b2i5.ted i6 .67 C.66er B1r t-e Gree6 A3res s?e3i.2 .ssessCe6t debt$ t-e debt s-192d not be re?1rted i6 F11t-i22sE Bi6.63i.2 st.teCe6tsF -1>eDer$ t-e 61tes t1 t-e Bi6.63i.2 st.teCe6ts s-192d dis321se t-e .C196t 1B t-e debt$ .s >e22 .s t-e B.3t t-.t t-e 51Der6Ce6t is i6 61 >.7 2i.b2e B1r re?.7Ce6t b9t is 1627 .3ti65 .s .6 .5e6t B1r t-e ?r1?ert7 1>6ers i6 3122e3ti65 t-e .ssessCe6ts$ B1r>.rdi65 t-e 3122e3ti16s t1 b16d-12ders$ .6d i6iti.ti65 B1re321s9re ?r13eedi65s$ iB .??r1?ri.te.

8-).

Fid93i.r7 B96ds .re des3ribed i6 .$ 3$ d$ B$ i$ .6d G. See e0?2.6.ti16s B1r e.3- B96d t7?e be21>. a. Tri-Centennial Fund. T-is is . private-purpose trust fund si63e t-e res19r3es >i22 be6eBit . br1.d 316stit9e637 r.t-er t-.6 G9st t-e 3itiHe6s 1B t-e 3it7. b. Perpetual Care Fund. T-is des3ribes . permanent fund .s t-e ?ri63i?.2 .C196t C9st be Ie?t i6t.3t$ b9t e.r6i65s 1B t-e B96d 3.6 be 9sed t1 ?r1Dide 3.re B1r t-e 3it7Es 1>6 3eCeteries. c. Poudre River Public Library District. .s .6 agency fund$ . Bid93i.r7 B96d. e3.9se 3it7 C.6.5eCe6t siC?27 .3ts .s . 39st1di.6 B1r t-e res19r3es 1B t-e B96ds$ t-is B96d B963ti16s

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds

d. School mpact Fee Fund. Si63e t-e 3it7 is .3ti65 i6 . 39st1di.2 3.?.3it7 >it- 61 dis3reti16 i6 t-e 9se 1r distrib9ti16 1B t-ese res19r3es$ t-e B96d is .6 agency fund.
Ch= 8. So%utions. 8-/ @ContCdA

e. Cultural Services and Facilities. Si63e t-e res19r3es .re B96ds 1B t-e 51Der6Ce6t$ t-e ?r15r.C ?riC.ri27 be6eBits t-e 51Der6Ce6t$ .6d t-e C.G1rit7 1B res19r3es .re ?r1Dided 16 .6 1651i65 b.sis Br1C ?erB1rCi65 .rts 3e6ter .6d C9se9C Bees$ it s-192d be .33196ted B1r .s . special revenue fund. f. Payroll Fund. Si63e ?.7r122 ded93ti16s .re t-e .ssets 1B 1t-er 51Der6Ce6ts:1r5.6iH.ti16s @e.5.$ Beder.2 51Der6Ce6t$ st.te 51Der6Ce6t$ ?e6si16 B96dsA$ .6 agency fund is 9sed t1 .33196t B1r t-e ded93ti16s. g. Telephone Commissions Fund. T-e 3it7 >192d 9se . special revenue fund$ si63e it ?riC.ri27 be6eBits Br1C 9si65 t-e 31CCissi16s t1 deBr.7 t-e 31sts re2.ted t1 1?er.ti16 1B t-e G.i2. h. !loc" #rant Fund. Si63e t-e 3it7 is reJ9ired t1 ?r1Dide C.t3-i65 B96ds$ t-e 5r.6t >192d be re?1rted i6 . special revenue fund. i. $ealth !enefits Fund. T-is is . pension and other employee benefit trust fund si63e t-e 3it7 is ?r1Didi65 . retireCe6t be6eBit t1 t-1se 19tside 1B 51Der6Ce6t @eC?217eesA. %. &nclaimed Property Fund. Si63e t-e st.te is C.i6t.i6i65 t-e ?r1?ert7 96ti2 s93- tiCe .s . 2e5.2 32.iC.6t 3.6 be B196d$ . private-purpose trust fund >192d be 9sed. U6ti2 t-e ?r1?ert7 reDerts t1 t-e st.te it is 316sidered . be6eBit t1 . ?.rt7 19tside 1B 51Der6Ce6t @t-e .s 7et 96B196d 32.iC.6tA.

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Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @ContCdA

8-#. a.

GENERAL JOURNAL Debits Credits

C T' (F )L!*RT+ LL* #*,*R)L F&,D/ EKUITY IN +OOLED INVEST"ENTS INVEST"ENTS REVENUES C!ANGE IN FAIR VALUE OF INVEST"ENTS )L!*RT+ LL* SC$((LSEKUITY IN +OOLED INVEST"ENTS INVEST"ENTS REVENUES C!ANGE IN FAIR VALUE OF INVEST"ENTS R C$.((D T(.,S$ PEKUITY IN +OOLED INVEST"ENTS REVENUES C!ANGE IN FAIR VALUE OF INVEST"ENTS INVEST"ENTS %&$&&& '$8,&$&&& '$8#&$&&& '&$&&& 4$%'&$&&& 4$%&&$&&& 1&$&&& ,&&$&&& 8,&$&&&

8-1&

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions. 8-0 @ContCdA

Debits b. ,+*ST/*,T P((L TR&ST F&,D1. U.S. TREASURY NOTES CERTIFICATES OF DE+OSIT DUE TO CITYES GENERAL FUND ADDITIONS DE+OSITS IN +OOLED INVEST"ENTS AL ERTVILLE SC!OOLS ADDITIONS DE+OSITS IN +OOLED INVEST"ENTS RIC!*OOD TO*NS!I+ %. U.S. TREASURY NOTES DUE TO GENERAL FUND ADDITIONS INVEST"ENT EARNINGS AL ERTVILLE SC!OOLS ADDITIONS INVEST"ENT EARNINGS RIC!*OOD TO*NS!I+ CAS! CERTIFICATES OF DE+OSIT DEDUCTIONS *IT!DRA*AL FRO" +OOLED INVEST"ENTS RIC!*OOD TO*NS!I+ CAS! @,ote/ See i6DestCe6t e.r6i65 3.2392.ti16s be21>.A '. CAS! UNDISTRI UTED EARNINGS ON +OOLED INVEST"ENTS (&$&&& '$&1&$&&& '$&1&$&&& '&$&&& ,&&$&&& 8$1&&$&&&

Credits

,&&$&&&

4$%'&$&&&

'$8#&$&&&

'$&&&

14$1&&

1%$,&&

'$&1&$&&&

'$&1&$&&&

(&$&&&

8-1)

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions. 8-0 @ContCdA

Debits 4. ACCRUED INTEREST RECEIVA LE UNDISTRI UTED EARNINGS ON +OOLED INVEST"ENTS (. UNDISTRI UTED EARNINGS ON +OOLED INVEST"ENTS DUE TO GENERAL FUND ADDITIONS INVEST"ENT EARNINGS AL ERTVILLE SC!OOLS ADDITIONS INVEST"ENT EARNINGS RIC!*OOD TO*NS!I+ #8$&&& %8$&&&

Credits

%8$&&&

11$#&&

(4$,,&

11$'1&

CO"+UTATION/ EKUITY AT EGINNING OF YEAR 4 INTEREST TREASURY NOTE DISTRI UTION *IT!DRA*AL 4 INTEREST INTEREST DISTRI UTION

Cit7Es GF L,&&$&&& 1&.&&4 L L '$&&& &

S3-112s L4$%'&$&&& 4#.&&4 L L 14$1&& & #&.(&4 L (4$,,& L L L

T1>6s-i? L'$8#&$&&& 4'.&&4 1%$,&& 8#%$,&& 14.(&4 11$'1& L L '$&1&$&&&

TOTAL L,$&&&$&&& 1&&.&&4 L '&$&&& L '$&1&$&&& L)$&%&$&&& 1&&.&&4 #8$&&&

EKUITY IN +OOL EFORE INTEREST L,&'$&&& 1(.&&4 L 11$#&&

L4$%44$1&&

c.

C T' (F )L!*RT+ LL* #*,*R)L F&,D/ EKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS )L!*RT+ LL* SC$((LSEKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS 14$1&& 14$1&& '$&&& '$&&&

8-1+

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions. 8-0 @ContCdA

Debits R C$.((D T(.,S$ P/ EKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS CAS! EKUITY IN +OOLED INVEST"ENTS d. C T' (F )L!*RT+ LL* #*,*R)L F&,D/ EKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS )L!*RT+ LL* SC$((LSEKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS R C$.((D T(.,S$ P/ EKUITY IN +OOLED INVEST"ENTS REVENUES INVEST"ENT EARNINGS e. 11$'1& (4$,,& 11$#&& '$&1&$&&& 1%$,&&

Credits

1%$,&&

'$&1&$&&&

11$#&&

(4$,,&

11$'1&

T-e i6DestCe6t tr9st B96d >192d 61t re?1rt t-e Ge6er.2 F96dEs i6terest i6 t-e ?112 si63e t-e Ge6er.2 F96d is .6 i6ter6.2 ?.rti3i?.6t. T-e Ge6er.2 F96d >192d re?1rt its i6terest i6 t-e i6DestCe6t ?112 i6 its Bi6.63i.2 st.teCe6ts. Si63e t-e s3-112 is .6 e0ter6.2 ?.rti3i?.6t$ t-e i6DestCe6t tr9st B96d >192d re?1rt t-e s3-112Es i6terest i6 t-e st.teCe6t 1B Bid93i.r7 6et ?1siti16 .6d i6 t-e st.teCe6t 1B 3-.65es i6 Bid93i.r7 6et ?1siti16.

8-1/

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @ContCdA

8-8.

C.2392.ti16 1B .669.2 ?e6si16 31st .6d 6et ?e6si16 1b2i5.ti16 @N+OA. ReBer t1 I229str.ti16 8-14 .6d re2.ted dis39ssi16 i6 C-.?ter 8 B1r t-e i6B1rC.ti16 6eeded t1 s12De t-is ?r1b2eC. a. C.2392.ti16 1B .669.2 ?e6si16 31st/ A669.2 reJ9ired 316trib9ti16 Add/ i X be5i66i65 N+O < @.&# X L('($#&&A Ded93t/ +V 1B be5i66i65 N+O A669.2 ?e6si16 31st '#$4,, @%)8$,%&A L '#($%#, L )&)$#&&

b. C.2392.ti16 1B 6et ?e6si16 1b2i5.ti16$ De3eCber '1$ %&14/ A669.2 ?e6si16 31st @Br1C ?.rt 1A Less/ A3t9.2 316trib9ti16 De3re.se i6 N+O d9ri65 t-e 7e.r N+O$ J.69.r7 1$ %&14 N+O$ De3eCber '1$ %&14 L '#($%#, @'8($&&&A @,$#%1A ('($#&& L (%($,#,

8-10

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @Cont?dA

8-,. Debits a. INVEST"ENTS ADDITIONS C!ANGE IN FAIR VALUE OF INVEST"ENTS b. STATE OF NODAM +U LIC E"+LOYEE RETIRE"ENT SYSTE" STATE"ENT OF C!ANGES IN +LAN NET +OSITION FOR T!E YEAR ENDED JUNE '&$ %&14 @IN T!OUSANDS OF DOLLARSA (8$8&& (8$8&& Credits

)DD T (,SCONTRI UTIONS +LAN "E" ERS E"+LOYER TOTAL CONTRI UTIONS INVEST"ENT INCO"E NET C!ANGE IN FAIR VALUE OF INVEST"ENTS INTEREST AND DIVIDENDS TOTAL INVEST"ENT INCO"E TOTAL ADDITIONS D*D&CT (,SANNUITY ENEFITS ENEFITS ('$,&& 14$&&& %8$8&& 8$8&& 1&($(&& 4)%$,&& 1$(##$&&& L%$&',$,&& DISA ILITY (8$8&& 1,,$#&& %(8$(&& ()8$4&& L 11%$1&& 1,#$8&& '&,$,&&

REFUNDS TO TER"INATED E"+LOYEES AD"INISTRATIVE EX+ENSES TOTAL DEDUCTIONS NET INCREASE NET +OSITION$ JULY 1$ %&1' NET +OSITION$ JUNE '&$ %&14

8-18

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions. 8-1 @ContCdA

c.

STATE OF NODAM +U LIC E"+LOYEE RETIRE"ENT SYSTE" STATE"ENT OF +LAN NET +OSITION AS OF JUNE '&$ %&14

ASSETS/ CAS! ACCRUED INTEREST RECEIVA LE INVEST"ENTS$ AT FAIR VALUE; EKUI+"ENT AND FIXTURES LESS ACCU"ULATED DE+RECIATION TOTAL ASSETS LIA ILITIES/ ACCOUNTS +AYA LE AND ACCRUALS NET +OSITION !ELD IN TRUST FOR +ENSION ; d. e5i66i65 b.2.63e = .dG9stCe6t @see ?.rt aA IB t-e B96d 9ses C1diBied .33r9.2 t-e eC?217er @N1d.IA >192d re?1rt .6 e0?e6dit9re B1r t-e .3t9.2 316trib9ti16 C.de t1 t-e ?e6si16 ?2.6. IB t-e B96d 9ses .33r9.2 .33196ti65 .6 e0?e6se >192d be re?1rted B1r t-e .669.2 ?e6si16 31st$ >it- .67 diBBere63e bet>ee6 t-e .C196t .3t9.227 316trib9ted t1 t-e ?2.6 .6d t-e .669.2 ?e6si16 31st i63re.si65 1r de3re.si65 t-e 6et ?e6si16 1b2i5.ti16. At t-e 51Der6Ce6t->ide 2eDe2 t-e re?1rti65 is C.de b.sed 16 .33r9.2 .33196ti65F t-ereB1re$ t-e re?1rted e0?e6se >192d eJ9.2 t-e .669.2 ?e6si16 31st >it- .67 diBBere63e bet>ee6 .3t9.2 316trib9ti16 .6d .669.2 ?e6si16 31st i63re.si65 1r de3re.si65 t-e re?1rted 6et ?e6si16 1b2i5.ti16. ENEFITS ''$4&& L%$&',$,&& L%($%&& '$1&& %%$1&& %$&#'$'&& L 1)$&&& ''$%&& %$&&%$&&&

8-11

Chapter 08 - Accounting for Fiduciary ActivitiesAgency and Trust Funds Ch= 8. So%utions @ContCdA

8.1&.

S1Ce 1B t-e err1rs 61ted i6329de/ E.3- t7?e 1B Bid93i.r7 B96d s-192d be re?1rted i6 . se?.r.te 3129C6. T-ereB1re$ t-e tr9st B96ds 3129C6 s-192d be se?.r.ted i6t1 t>1 3129C6s$ 16e B1r t-e i6DestCe6t tr9st .6d 16e B1r t-e ?riD.te?9r?1se tr9st. A t1t.2 3129C6 is 5e6er.227 61t 9sed si63e t-e t1t.2 is 31Cbi6i65 diBBere6t t7?es 1B Bid93i.r7 B96ds. I6DestCe6ts .re t1 be re?1rted .t B.ir D.29e. T-ere 6eeds t1 be .6 i6di3.ti16 .s t1 >-et-er i6DestCe6ts .re bei65 re?1rted .t B.ir D.29e. *-i2e . tr9st B96d C.7 -.De 3.?it.2 .ssets .6d . 3.?it.2 2e.se 1b2i5.ti16$ .67 3.?it.2 .ssets >192d be re?1rted 6et 1B de?re3i.ti16 r.t-er t-.6 .t 31st. A6 .5e637 B96d s-192d 61t re31rd . 3.?it.2 .sset 1r . 3.?it.2 2e.se 1b2i5.ti16. A6 .5e637 B96d s-192d 61t re?1rt .33196ts ?.7.b2e. T-e .5e637 B96ds >192d 61t re?1rt 6et ?1siti16 -e2d i6 tr9st. !1>eDer$ .6 .5e637 B96d C9st re?1rt t-e 2i.bi2it7 @D9e t1 Ot-er U6its .6d G1Der6Ce6tsA t1 t-e ?.rti3i?.6ts B1r t-e .ssets -e2d i6 t-e .5e637 B96d. T-e .5e637 2i.bi2it7 -.s bee6 Cisre?1rted .s 6et ?1siti16 i6 t-e e0.C?2e 5iDe6. Net ?1siti16 -e2d i6 tr9st B1r t-e 3196t7 s-192d 61t be re?1rted. Si63e t-e 3196t7 is t-e .dCi6isteri65 51Der6Ce6t$ t-e .ssets .6d 2i.bi2ities 1B t-e Bid93i.r7 B96ds re2.ted t1 t-e 3196t7 >192d 61t be re?1rted 16 t-e Bid93i.r7 Bi6.63i.2 st.teCe6ts. R.t-er t-e i6B1rC.ti16 >192d be re?1rted b7 t-e .??r1?ri.te B96d i6 t-e 3196t7Es reJ9ired B96d .6d 51Der6Ce6t->ide Bi6.63i.2 st.teCe6ts.

8-!0