A pass-through agency fund is a group of fixed income funds secured by a group of assets. A service provider accumulates the contributions made by the issuers, and deducts a fee (GASB, 2014). The balance is then passed through to the holders of the funds. It is appropriate to use pass-through agency funds if its usage will lead to improvement in accounting or financial management; if its usage is required for accountability reasons; and if its usage is mandated by GASB standards, regulations, or law.
Fair value is referred to as the sum at which a venture can be traded between two consenting parties. At fair value, there is no instance of force on any of the parties (GASB, 2014). GASB requires that the investments should be reported at fair value in the balance sheet. The fair value should be used in any financial statement to record the value of the investment. Every unit of a transaction should be valued using the fair value. The fair value ensures that the two trading parties are contented with the price.
The requirements for GASB differ from the requirements of corporate entities. The difference arises because the corporate entities are sometimes allowed to record some investments at a value that has been amortized (GASB, 2014). There is, however, a condition that the entities have to satisfy for them to use the amortized cost. The condition is that at the time of purchase the investment should be having one year or less towards maturity in the case of government entities. For the other corporate entities, the fair value of such investments should not be largely affected by adopting the amortized cost. In addition, the short-term investments should have a maturity period of not more than ninety days (GASB, 2014).
References
GASB, (2014). Fair Value Measurement and Application. Retrieved from: file:///C:/Users/USER/Downloads/gasbproposal_fairvaluemeasurement_15may2014.pdf
