1. Fiduciary assets are not recorded in the government-wide financial statements. They are reported at the fund level because they are not available for general use. There are also instances where the government has fiduciary responsibility but does not report them in fiduciary funds.
2. Fiduciary funds refer to the assets that the government holds in trust for individuals, private organizations, and governmental units. The funds report assets that do not belong to the government, but are held by it as a trustee or an agent. The government acts as a fiduciary by undertaking to act on behalf of and for the benefit of individuals, organizations, and other governmental units. The four types of fiduciary funds include agency funds, private-property trust funds, investment trust funds, and pension trust funds (GASB, 2007).
As a fiduciary, the government stands in special trust and the law of the land imposes its fiduciary duty. The government, as the core agent, downplays its self-interest to that of its principals. There is a difference between agency relationship and acting as a fiduciary. Agents simply hold the assets and keep them safe until the principal wants them back. However, a trustee (fiduciary) is required to not only hold the assets but to also engage them in an investment program to guarantee a return for the principal.
3. Generally, the basis of accounting used in the recording of fiduciary funds is the accrual basis. However, economic resource measurement focus can also be used in government wide financial statements. The fiduciary funds do not have net assets, expenses, or revenues, because they are not intended for profit. They are only recorded to show the assets and the liabilities. Thus, the accounting equation for fiduciary funds is Assets=Liabilities.
4. The proprietary and fiduciary fund statements and the government wide financial statements report information on an accrual basis. However, the governmental fund financial statement usually reports the financial information in a modified accrual basis (GASB, 2007). The financial information found in such a statement is usually referred to as current financial resources. The full accrual method contains all the flows (inflows and outflows) of all the economic resources, short and long-term assets, as well as short and long term liabilities. The modified accrual basis only includes items that belong to the short-term class of assets and liabilities. The reason behind this is the fact that the assets found in the governmental funds are usually liquidated within a year or so while the liabilities in such funds are usually covered or repaid within the year with current resources. The revenues collected in the governmental funds are done so within a year and are used to finance the expenditures of the current year. The expenditures will cover the use of resources within the year.
Government Accounting Standards Board- GASB (2007). Touring the Financial Statements, Part III; The Governmental Funds. Retrieved on 31/3/2016 from http://www.gasb.org/cs/ContentServer?pagename=GASB/GASBContent_C/UsersArticlePage&cid=1176156735732