Custodial Funds: Reporting

If you only read one thing Custodial funds use additions and deductions, not revenues and expenses, because the government isn’t earning anything, it’s just passing resources through.

Builds on FM9.2 Custodial funds hold pass-through money. This page covers the specific language used when reporting it.

Why This Matters

The terminology itself is a signal. Seeing “additions and deductions” instead of “revenues and expenses” on a statement should immediately tell you you’re looking at fiduciary activity, not the government’s own operations.

What’s Actually Going On

Custodial funds report additions and deductions rather than revenues and expenses, precisely because the government isn’t earning revenue or incurring expenses in the usual sense, it’s just collecting and disbursing resources that were never really its own.

These funds also don’t appear in the government-wide statement of activities at all. Since the government doesn’t own or control the resources for its own benefit, including them there would overstate what the government actually has available to spend.

How This Applies

If you’re looking for a custodial fund’s activity in the government-wide financial statements and can’t find it, that’s expected, not a missing page. Fiduciary activity lives in its own separate statements, entirely apart from the government-wide view.