Are all pass-through grants required to be reported in an agency fund?

In the context of accounting for pass-through grants, only those that are classified as pure cash conduits must be reported in an agency fund. This is because agency funds are specifically designed to track assets held by a governmental unit for the benefit of others, which fits the nature of pure cash conduits where the government is merely acting as an intermediary.

Pass-through grants can encompass various types of financial assistance, and not all of them qualify for agency fund reporting. For example, if a grant involves significant involvement in its administration or programmatic outcomes, it may not meet the criteria of a pure cash conduit and thus could be recorded in different types of funds, such as special revenue funds or capital project funds, depending on the intended use of the grant funds.

This distinction is crucial for accurate financial reporting and ensures that the financial statements reflect the true nature of the transactions and the responsibilities of the governmental entity. Understanding the specific requirements for reporting grants helps maintain compliance with accounting standards and promotes transparency in fund management.