Glen County uses governmental fund accounting and is the administrator of a multiple-jurisdiction deferred compensation plan covering both its own
employees and those of other governments participating in the plan. This plan is an eligible deferred compensation plan under the U.S. Internal Revenue Code
and Income Tax Regulations. Glen has legal access to the plan's $40,000,000 in assets, comprising $2,000,000 pertaining to Glen and $38,000,000 pertaining
to the other participating governments. In Glen's balance sheet, what amount should be reported in the custodial fund for plan assets and as a corresponding
liability?
A. $0
B. $2,000,000
C. $38,000,000
D. $40,000,000
You answered B. The correct answer is D.
When a governmental unit is the administrator of a multiple-jurisdiction deferred compensation plan, it should report all of the plan assets and liabilities (e.g.,
$40,000,000) in Custodial Fund because the governmental unit is acting as an agent for both its own employees and other governments participating in the
plan.
-I thought for custodial accounts the liability portion was only for the government unit of the financial statements and the the net position was for the portion that belonged to another entity. The assets would be $40, liabilities would be $38 and net position would be $2. Can someone please explain this. Thank you.
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