County’s External Investment Pool

3 Accounting

3.2 Assets

3.2.9 County’s External Investment Pool

This guidance applies only to counties. General accounting principles require the use of fiduciary funds to account and report assets held in a trustee or agency capacity for others. Custodial funds are used to account for situations where the government’s role is purely custodial. They are most commonly used by counties to account for taxes collected on behalf of special purpose districts. Trust funds are subject to a formal trust agreement or an agreement that is acting like a trust. Resources classified as trust or custodial funds cannot be used to support the government’s own programs. In accordance with accounting principles, when counties provide investment services to other entities under RCW 36.29.020 whether through investment pool(s) or by individual investment accounts, the county is considered a sponsoring government, and therefore has a fiduciary responsibility for those investments. A county is sponsoring an external investment pool when commingling (pooling) the monies of more than one legally separate entity that are not part of the same reporting entity as the sponsoring government, and invests, on the participant’s behalf. This includes investing in the Local Government Investment Pool when all the monies are held in the county’s name. When a County Treasurer invests any funds in its custody not required for immediate expenditure, whether or not at the request of a district, the County Treasurer is investing on behalf of the districts. The districts’ share in the risk of loss of those investments, so long as the County Treasurer has complied with the statutory requirements in making those investments, and said resources should be reported as an investment pool by the county. Per guidance from the Attorney General’s Office all counties operate a pool. As such, all counties should report investments in either the investment trust fund or the custodial – external investment pool per the criteria located in BARS Manual 3.1.7, Fund Types and Accounting Principles. Reporting investments in both an investment trust fund or the custodial – external investment pool fund and custodial funds, will cause duplicative reporting of the same cash.