The goal of fiduciary accounting is to ensure maximum clarity, full disclosure and complete description of all events in standards that are acceptable and according to legal prescriptions. However, these goals do compete in some instances. Clarity may be impaired by a full disclosure that requires nothing omitted. In other cases, full explanation may produce a voluminous document that is too big for parties to read. Fiduciary Accounting Principles In an effort to make fiduciary accounting standardized, some laid down frameworks have been forwarded to enhance this.
First, the accounts should be stated in a manner that is understandable by any person even when they are not familiar with practices and terminology common in the administration of estates and trusts. This is in order for the accounts to achieve the communication objective. Secondly, a fiduciary account ought to contain sufficient information to inform the interested parties about the transactions affecting the administration of the fund. This allows the interested parties to follow the progress of administration of the fund. The significant item values are posted individually and not as a summary (Siegel & Jae, 2000).
Transactions should be described in a sufficient detail that gives the interested parties their purpose and effect. Moreover, a fiduciary account should include both the carrying values – representing the value of assets at acquisition by the fiduciary- and current values at beginning and end of the accounting period. This is to ensure consistency. Additionally, a fiduciary accounting allows that a concise summary of the purpose of an account is given. This is to ensure possibility of getting a brief understanding of the general purpose.
What constitutes fiduciary accounting income governs proper allocation of principle and income is generally defined in the state laws derived from the Uniform Principal and Income Act (UPIA). Conclusion The fiduciary account finally shows the balance at hand. If it is interim accounting, this becomes the end. In other cases, the fiduciary may indicate the proposed distribution if the fiduciary service is over. The fiduciary account is then given to the interested parties or incase of a minor, it is filed with the court awaiting court’s approval. Courts approval absolves the fiduciary from any liability.
In case the court is not involved, the agent or beneficiary may consent its acceptability. Finally, any objections or disputes must be made known to the fiduciary. If there is any indication that the fiduciary may have embezzled or mismanaged the client’s money, then this has to be ascertained by an audit. References Siegel J. K & Jae K. S (2000) Accounting handbook, New York: Barron’s Publishers Spencer, P (2009) What is Fiduciary Accounting? Retrieved 11 June 2009 from http://www. spencerfiduciaryservices. com/fiduciary-accounting/what-is-a-fiduciary-accounting