A fiduciary fund reports resources a state or local government controls for beneficiaries outside the government's own programs.
A fiduciary fund is a U.S. state or local government accounting fund used to report resources the government controls for beneficiaries outside the government’s own programs. Those resources are held in a trustee or custodial role and are not available to finance the government’s services.
Fiduciary classification depends on GASB criteria, not merely on an account being labeled “trust,” “agency,” or “custodial.” The government must evaluate who benefits, whether the resources are part of its own operations, how it controls the assets, and whether a qualifying trust arrangement exists.
| Class | What it reports | Illustrative activity |
|---|---|---|
| Pension and other employee benefit trust fund | Qualifying pension and other employee benefit arrangements | Public employee pension plan |
| Investment trust fund | External participants’ portion of a qualifying investment pool | Local governments participating in a state investment pool |
| Private-purpose trust fund | Qualifying trust arrangements benefiting specific individuals, organizations, or other governments | Scholarship trust benefiting named students |
| Custodial fund | Other qualifying fiduciary activities not reported in one of the trust-fund classes | Taxes collected and remitted to another government |
The exact classification is fact-specific. An activity can involve another party’s money without meeting the fiduciary reporting criteria, and a legally separate entity may instead be a component unit.
Fiduciary fund statements generally include:
They use accrual accounting and the economic resources measurement focus. Assets, deferred outflows, liabilities, deferred inflows, and fiduciary net position are therefore reported within the applicable fund statements.
For custodial funds, additions and deductions are generally reported rather than only the ending amount due to recipients. This helps readers see the scale and flow of resources administered for others.
Suppose a county collects $120 million of property taxes during the year. Of that amount:
The county’s own $75 million is not fiduciary solely because it came through the same tax-collection system. The $45 million may qualify for custodial fund reporting if the GASB fiduciary-activity criteria are met.
The custodial fund would show additions from tax collections and deductions when amounts are remitted to the school districts. Any year-end amount awaiting remittance may appear as fiduciary net position or as a related payable depending on the applicable facts and reporting requirements.
The example shows why gross collections should not automatically be interpreted as the reporting government’s revenue.
| Question | Fiduciary fund | Governmental Fund | Proprietary Fund |
|---|---|---|---|
| Who primarily benefits? | External beneficiaries | Public through governmental services | External customers or government departments |
| Available for government’s own programs? | No | Yes, subject to constraints | Yes, for the reported service activity |
| Measurement focus | Economic resources | Current financial resources | Economic resources |
| Accounting basis | Accrual | Modified accrual | Accrual |
| Included in government-wide statements? | No | Converted and included as governmental activities | Generally included in governmental or business-type activities, depending on fund type |
| Residual term | Fiduciary net position | Fund balance | Fund net position |
A pension trust fund’s net position is not the same as the sponsoring government’s net pension liability. Pension plan statements report plan assets and changes in fiduciary net position, while employer pension accounting compares the total pension liability with plan fiduciary net position under the applicable standards.
Analysts should not assume that a large pension trust portfolio means the plan is fully funded. The liability measurement date, actuarial assumptions, contribution policy, asset valuation, and benefit terms all matter.
This article provides general financial-reporting education, not legal, fiduciary, pension, accounting, audit, tax, or investment advice. Apply the current standards and governing documents to the specific arrangement.