"This directive is a significant and necessary measure," Comptroller Thompson said. "It assigns requisite controls to the way that agencies create and control fiduciary accounts. It also discourages agencies from using those accounts to record resources that should be recorded in the City's General Fund."

Fiduciary accounts are used to record financial resources held and administered in a trust or agency capacity by the City. The directive provides guidance for the overall accountability and control of these funds. It addresses several different types of fiduciary accounts, including private-purpose trust funds (which are used to report all trust arrangements under which principal and income benefit individuals, private organizations or other non-City governmental agencies) and agency funds (which are used to report assets held in a purely custodial capacity for the benefit of individuals, private organizations or non-City governmental agencies).

The directive also applies to permanent funds, which are used to report sources that are legally restricted so that only earnings may be used to directly support the reporting government's programs. Permanent funds record arrangements similar to those referred to as endowments.

The directive specifies that any public or private grants or donations other than endowments given to the City of New York for the purpose of supporting the City's own programs will not qualify as a private-purpose trust or agency fund. Instead, they will be considered public-purpose resources and must be recorded in the City's General Fund.

The measure establishes a series of internal controls to ensure that assets are properly managed. The controls include guidelines that direct agencies to maintain separate and complete files on each individual fiduciary account and exercise care in ensuring that an arms-length relationship exists between the City and separate organizations set up to handle private donations. This is important so that "the entities are not being utilized to supplement or bypass agency budgets or divert funds that rightfully should be reported as revenue to the General Fund."

The directive requires that agencies that maintain fiduciary accounts must submit an annual certification for each individual account verifying that the account is active and that established internal controls are being followed.

Additionally, the directive establishes a checklist of required information that must be submitted to the Comptroller's Office and the Mayor's Office of Management and Budget when requesting the creation of a fiduciary account. Further, the directive requires each agency to provide a listing of all bank accounts maintained by the agency to the Comptroller, along with each account's financial activity.

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