The fiduciary fund category includes the following (see GASB Statement No. 84, paragraphs 15, 16, 17, and 18):
- Pension (and other employee benefit) trust funds,
- Investment trust funds,
- Private-purpose trust funds, and
- Custodial funds.
“The three types of trust funds are distinguished from custodial funds by the existence of a trust agreement or equivalent arrangement that has certain characteristics. Financial statements of fiduciary funds should be reported using the economic resources measurement focus and the accrual basis of accounting. … Required financial statements for fiduciary funds are the statement of fiduciary net position and the statement of changes in fiduciary net position. Fiduciary fund financial statements should include information about all fiduciary funds of the primary government, including fiduciary component units.” – GASB Codification 1300.102c.
Custodial Fund Type
Custodial Funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.
701-General Custodial Fund
The General Custodial Fund (formerly the “General Agency Fund”) is found in any local unit of government. It is used to account for resources held by the local unit in a purely custodial capacity. Money in this fund is from current tax collections (except townships), delinquent tax collections, fee collections for other units of government, and other money held in a purely custodial capacity.
The cash and investments of the General Custodial Fund are subject to the requirements of 1943 PA 20, MCL 129.91, and may be included in pooled cash and investments account.
703-Current Tax Collection Fund
The Current Tax Collection Fund is found in any local unit of government that collects taxes and/or special assessments for other local units. It is used to account for resources held by the local unit in a purely custodial capacity. Money in this fund is from current tax and special assessment collections. Timely distribution to the appropriate fund and local unit must be made in accordance with Section 43 of the General Property Tax Act, 1893 PA 206,
MCL 211.43.
The cash and investments of the Current Tax Collection fund are subject to the requirements of 1943 PA 20, MCL 129.91. The Michigan Department of Treasury requires separate cash and investment accounts for the Current Tax Collection Fund.
Investment earnings follow the principal (amount of taxes for each unit) unless the tax collecting unit has other agreements with the tax levying units.
704-Imprest Payroll Fund
(Ending balances of this fund must be folded into the General fund. This fund must not be reported in the audited financial statements.)
The Imprest Payroll Fund may be found in any local unit of government to account for the payroll paid to employees. It is used to account for the payroll of the local unit after reimbursement from the benefited funds of the local unit. The payroll deductions usually accumulate in this fund until paid to the appropriate fund or other creditor of the unit. It is used to account for resources held by the local unit in a purely custodial capacity. The Imprest Payroll Fund has no revenue or expenditure accounts and is composed only of balance sheet accounts.
The cash and investments of the Imprest Payroll fund are subject to the requirements of 1943 PA 20, MCL 129.91. This fund has its own depository and should have a balance only as required by the financial institution to maintain an open account.
710-District (Municipal) Court Custodial Fund
The District (Municipal) Court Custodial Fund may be found in any unit of government that acts as the local funding unit for a district or municipal court. The fund may be established by resolution of the legislative body of the local unit at the request of the court.
The fund is used to account for bond and other trust money held by a district or municipal court. Fees and fines collected on behalf of and remitted to other units of government are accounted for in this fund. Bond and restitution are determined by the court which represents administrative control; accordingly, these would be recorded in the General fund of the court. The Michigan State Court Administrative Office’s ‘Court Administration Reference Guide’ authorizes a bank account to be established only when the account is necessary. This bank account is designated for the proper receipt and disbursement of certain revenues and funds that cannot be deposited and more efficiently administered directly through the funding unit. The Michigan Court Administration’s Reference Guide authorizes four bank account types for courts: Trust Account, Depository Account, Reimbursement Account, and Operational Account. Although the court may maintain the bank accounts, the local funding unit treasurer has the statutory responsibility for the trust accounts. The court must provide the local funding unit treasurer monthly bank account reconciliations on a timely basis. This reconciliation includes maintaining a detailed ledger by the court of all trust items that reconciles in total to the reconciled bank account balance.
The cash and investments of the District (Municipal) Court Custodial Fund are subject to the requirements of 1943 PA 20, MCL 129.91, and may be included in pooled cash and investments account.
711–Probate Court Custodial Fund
The Probate Court Custodial Fund is found in county government. The fund may be established by resolution of the county board of commissioners at the request of the court.
The fund is used to account for bond and other trust money held by a probate court. Fees and fines collected on behalf of and remitted to other units of government are accounted for in this fund. Bond and restitution are determined by the court which represents administrative control; accordingly, these would be recorded in the General fund of the court. The Michigan State Court Administrative Office’s ‘Court Administration Reference Guide’ authorizes a bank account to be established only when the account is necessary. This bank account is designated for the proper receipt and disbursement of certain revenues and funds that cannot be deposited and more efficiently administered directly through the funding unit. The Michigan Court Administration’s Reference Guide authorizes four bank account types for courts: Trust Account, Depository Account, Reimbursement Account, and Operational Account.
Although the court may maintain the bank accounts, the local funding unit treasurer has the statutory responsibility for the trust accounts. The court must provide the local funding unit treasurer monthly bank account reconciliations on a timely basis. This reconciliation includes maintaining a detailed ledger by the court of all trust items that reconciles in total to the reconciled bank account balance.
The cash and investments of the Probate Court Custodial Fund are subject to the requirements of 1943 PA 20, MCL 129.91, and may be included in pooled cash and investments account.
712-Trial Court Custodial Fund
The Trial Court Custodial Fund may be found in any unit of government that acts as the local funding unit for a demonstration project (consolidated) trial court. The fund may be established by resolution of the legislative body of the local unit at the request of the court.
The fund is used to account for fees and fines collected on behalf of and remitted to other units of government. Bond and restitution are determined by the court which represents administrative control; accordingly, these would be recorded in the General fund of the court. The Michigan State Court Administrative Office’s ‘Court Administration Reference Guide’ authorizes a bank account in the name of the court to be established only when the account is necessary. This bank account is designated for the proper receipt and disbursement of certain revenues and funds that cannot be deposited and more efficiently administered directly through the funding unit. The Michigan Court Administration’s Reference Guide authorizes four bank account types for courts: Trust Account, Depository Account, Reimbursement Account, and Operational Account.
Although the court may maintain the bank accounts, the local funding unit treasurer has the statutory responsibility for the trust accounts. The court must provide the local funding unit treasurer monthly bank account reconciliations on a timely basis. This reconciliation includes maintaining a detailed ledger by the court of all trust items that reconciles in total to the reconciled bank account balance.
The cash and investments of the Trial Court Custodial Fund are subject to the requirements of 1943 PA 20, MCL 129.91, and may be included in pooled cash and investments.
714-Inmates’ Custodial Fund
The Inmates’ Custodial Fund may be found in counties that have a jail facility. This fund is used to account for money belonging to inmates lodged at the jail. The accounting for funds belonging to prisoners lodged at the county jail is the responsibility of the county sheriff. Such moneys must be deposited with the county treasurer. The sheriff is responsible for the individual inmate accounts and for authorizing payments of these moneys by the county treasurer or from the Imprest Inmate Trust bank account and subsequent replenishment of the Imprest accounts.
As inmates are admitted to jail, their personal funds are placed in this custodial fund. Friends and relatives may also make deposits for the benefit of an individual inmate. Money may be withdrawn only for the benefit of the particular inmate. Each withdrawal must be properly authorized. Written procedures must be established for the handling of these funds to safeguard the inmate’s money held in trust. This fund must have its own depository bank account that is reconciled monthly. Individual inmate accounts must be maintained and reconciled to the total of the depository bank account.
The cash and investments of the Inmates’ Custodial Fund are subject to the requirements of 1943 PA 20, MCL 129.91.
721-Library Penal Fine Fund
The Library Penal Fine Fund is found in counties and is required by 1964 PA 59, MCL 397.32. It is used to accumulate money collected by courts for fines imposed for state law violations. The accumulated fines must be apportioned annually by the county treasurer among the public libraries and county library in the county in accordance with the directions of the state board for libraries before August 1 of each year.
The cash and investments of the Library Penal Fine Fund are subject to the requirements of 1943 PA 20, MCL 129.91, and may be included in pooled cash and investment accounts.
Pension and other employee benefit trust funds should be used to report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other postemployment benefit plans or other employee benefit plans. (GASB Statement 34, Paragraph 70).
Pension Trust Funds
Pension or OPEB plans that are administered through trusts that meet the definition of paragraph 3 of Statement No. 67 or paragraph 3 of Statement 74. Resources are held in a trust and contributions are irrevocable and protected from creditors.
726-Employees 457 Deferred Compensation Fund
The Employees 457 Deferred Compensation Fund may be found in any unit of government that has fiduciary responsibility for a single employer Employees 457 Deferred Compensation Plan.
A Section 457 Plan should not be reported in a government’s financial statements if a fiduciary relationship does not exist. However, a financial statement note is required in Michigan to disclose the relationship between the deferred compensation plan and the governmental unit.
The cash and investments of the Employees 457 Deferred Compensation Fund are subject to the requirements of the plan document.
727-401K Deferred Compensation Fund
The 401K Deferred Compensation Fund can be found in any local unit which established a 401K Deferred Compensation Plan prior to the effective date established by the Tax Reform Act of 1986.
This fund is only used for 401K plans in which employees contribute. The 401K Retirement System Fund Number 733 should be used when both employees and the employer contribute to the fund.
Administration of the investments of this fund may be done directly by the local unit or by contract with an insurance company, bank trust department, or other financial organization authorized to do business in Michigan.
731-Retirement System Fund
The Retirement System Fund may be found in any local unit of government that administers an employees’ retirement system. The fund is established in accordance with:
- Charter County - MCL 45.514(1)(e)
- City by Charter or Ordinance - MCL 117.4i and 117.4j
- City Library, population of over 250,000 - MCL 38.701
- Combined Retirement Systems - MCL 38.691
- County - MCL 46.12a
- County Hospital - MCL 331.154a
- Townships--Refers to County Section 46.12a - MCL 41.110b
- Villages - Constitution, article 9, § 24
Each retirement system must be accounted for in a separate Retirement System Fund.
The money in this fund is obtained from employer contributions, employee contributions, and investment earnings and/or a special tax levy. The cash and investments of the Retirement System Fund are subject to the requirements of the Public Employee Retirement System Investment Act, 1965 PA 314, MCL 38.1132 to MCL 38.1140m.
733-401K Retirement System Fund
The 401K Retirement System Fund may be found in any local unit of government that administers an employees’ 401K retirement system in which only the employer contributes, or both the employer and employees contribute. Fund Number 727, 401k Deferred Compensation Fund, should be used if only the employees contribute. Only those local units which had established a 401K Retirement Plan prior to the effective date established in the Tax Reform Act of 1986 may have this fund. The fund is established in accordance with:
- Charter County - MCL 45.514(1)(e)
- City by Charter or Ordinance - MCL 117.4i and 117.4j
- City Library, population of over 250,000 - MCL 38.701
- Combined Retirement Systems - MCL 38.691
- County - MCL 46.12a
- County Hospital - MCL 331.154a
- Townships--Refers to County Section 46.12a - MCL 41.110b
- Villages - Constitution, article 9, § 24
Each retirement system must be accounted for in a separate Retirement System Fund.
The money in this fund is obtained from employer contributions, employee contributions and investment earnings.
Administration of the investments may be done by the local unit or by contract with an insurance company or bank trust department.
736-Public Employee Health Care Fund
The Public Employee Healthcare Fund may be found in any unit of government and is for the accumulation and investment of funds to provide for the funding of healthcare benefits to retired employees of the local unit and their beneficiaries. The fund is authorized by 1999 PA 149, MCL 38.1211 to MCL 38.1216.
MCL 38.1213 states in part:
The legislative body of a public corporation may adopt a resolution establishing a public employee health care fund for the purpose of accumulating funds to provide for the funding of health care benefits to retirees and beneficiaries of the retirees of the public corporation...The resolution shall include all of the following:
- The designation of a person or persons who shall act as the fund's investment fiduciary.
- A restriction of withdrawals from the fund solely for the payment of health care benefits on behalf of qualified persons and the payment of the expenses of administration of the fund.
- The designation of who is a qualified person for purposes of payment of health care benefits from the fund.
- A determination of whether the fund will be established on an actuarial basis.
MCL 38.1214 states in part:
An investment fiduciary shall invest the assets of the fund in accordance with an investment policy adopted by the governing body of a public corporation and that complies with section 13 of the public employee retirement system investment act, 1965 PA 314, MCL 38.1133...The public corporation may invest the fund's assets in the investment instruments and subject to the investment limitations governing the investment of assets of public employee retirement systems under the public employee retirement systems investment act, 1965 PA 314, MCL 38.1132 to 38.1140.
MCL 38.1215 states:
The legislative body of a public corporation may, by resolution, allow a trust to invest the assets of the trust in accordance with the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140. The resolution requires:
- A statement of the authority under which the trust is established.
- Approval to invest the assets of the trust in accordance with the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140.
The Act requires as stated in MCL 38.1216:
The investment fiduciary shall have an actuarial review of the fund or trust prepared at least every 5 years with assets valued on a market related basis. The investment fiduciary shall prepare and issue a summary annual report to the legislative body of the public corporation that established the fund or trust.
Fund Number 737, Other Postemployment Benefits (OPEB) Fund, should be used for other postemployment benefits under GASB Statement 75.
737-Other Postemployment Benefits (OPEB) Fund
The Other Postemployment Benefits Fund may be found in any unit of government that has chosen to establish a single employer plan (or a multiple employer plan if the governmental unit performs the accounting and fiduciary duties of the fund) to fund its liability for retirement benefits under GASB Statement 75.
The Public Employee Healthcare Fund Number 736 should be used if the local unit of government has elected to establish a retiree healthcare plan in accordance with 1999 PA 149, MCL 38.1211 to MCL 38.1216. The Michigan Department of Treasury recommends that government units establish a separate fund for each individual OPEB plan it has in effect.
The Michigan Department of Treasury requires the authorized fiduciary or trust as the case may be, to invest the assets of the fund in accordance with an investment policy adopted by the governing body and in compliance with the Public Employee Retirement System Investment Act, 1965 PA 314, MCL 38.1132 to MCL 38.1140m.
Investment trust funds should be used to report the external portion of investment pools reported by the sponsoring government, as required by GASB Statement 31, Paragraph 18 (GASB Statement 34, Paragraph 71).
751-Local Unit Investment Pool Trust Fund (Investment Trust Fund)
A Local Unit Investment Pool Trust Fund may only be found in counties. A county may contract with the local units within that county to accept money from those local units for management, investment, and reinvestment by the county treasurer. The treasurer of the participating county may pool that money with money deposited by other local units under this act in a local government investment pool for purposes of management, investment, and reinvestment.
The cash and investments of the Local Unit Investment Pool Trust Fund are subject to the requirements of 1943 PA 20, MCL 129.91.
Private-Purpose Trust Funds
Private Purpose Trust Funds are used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds and (b) are held in a trust that the government itself is not the beneficiary, provides benefits in accordance to the benefit terms, and is legally protected from the creditors of the government.
756 through 779, 783 through 799-Open for Private Purpose Trust Funds
Private-purpose trust funds should be used to report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.