Which of the following is considered an inappropriate treatment for assets held for the payment of future OPEB?

Assets held for the payment of Other Post-Employment Benefits (OPEB) should be managed with specific considerations regarding their purpose and how they are accounted for. The general fund, which represents a government’s main operating fund, typically cannot be appropriately used for holding assets reserved for specific liabilities such as OPEB.

Using a designated fund balance within the general fund does not provide the necessary separation and protection of those assets for long-term obligations. General funds are subject to the government’s overall budgetary processes, making them less secure compared to dedicated funds specifically established for OPEB liabilities. The appropriate treatment involves segregating those funds into a trust that is specifically designed for such purposes.

In contrast, a pension trust fund is specifically intended for managing post-employment benefits and complies with the required reporting and fiduciary standards. An agency fund is used for collecting and distributing money or assets on behalf of others, aligning well with the purpose of managing OPEB. Thus, the designated fund balance in the general fund does not provide the necessary safeguards and is therefore deemed an inappropriate treatment for assets meant for future OPEB payments.