In what context is a Combining Statement of Changes in Assets and Liabilities required?

A Combining Statement of Changes in Assets and Liabilities is particularly relevant for Agency Funds within the context of governmental accounting. Agency Funds are used to account for resources that are held by a government in a custodial capacity for others, meaning the funds are not owned by the government but are being held on behalf of individuals, organizations, or other governments.

The importance of a Combining Statement of Changes in Assets and Liabilities lies in providing transparency about the resources managed through these agency funds. This statement helps to track any changes in the assets and liabilities over a specified period, thereby ensuring accountability in the handling of funds that do not belong to the government itself.

In contrast, other types of funds and financial statements, such as government-wide financial statements, proprietary funds, and governmental fund accounting, follow different reporting standards and requirements that do not necessitate the use of this specific combining statement. For instance, government-wide financial statements focus on the overall financial position of the government and consolidate all activities, whereas proprietary funds are designed to account for activities that operate similarly to private businesses.