what is a proprietary fund

What is a Proprietary Fund? A proprietary fund is used in governmental accounting

to account for activities that involve business-like interactions, either within the government or outside of it. These activities are similar to what would be found in the private sector, so the reporting resembles what would be used by a private business.

Full Answer

What does a proprietary trader do?

Proprietary Trading Definition: In proprietary trading, traders buy and sell securities using the firm’s own money to make a profit; the trading may be directional (betting that a security’s price will go up or down) or market-making (acting as both the buyer and seller of securities and making a profit on the bid-offer spread).

What is a non profit fund?

A non-profit endowment is a fund that consists of donations such as cash, stocks, and other similar types of assets. Typically the future of the endowment is secured because the principle remains untouched. Assets drawn from gains must be well-documented and the reasons adequately supported.

What are proprietor's funds?

The word "Proprietors" is a synonym for "owners of a business", proprietors' fund, in this case, would only be the funds which belong to the owners/shareholders of the business. Proprietors' funds are also known as Owners' funds, Shareholders' funds, Net Worth, etc.

What are proprietary accounts?

Proprietary asset and liability accounts cover the receipt of funds in the Treasury, the proper classification of assets (such as receivables, prepayment, inventory and fixed assets), and the...

What is an example of a proprietary fund?

Examples of Proprietary Funds include interfund loans, proceeds of tax-supported bond issues, as well as transfers from other relevant governments.

What are the characteristics of a proprietary fund?

Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred.

What is the difference between a fiduciary and a proprietary fund?

Proprietary funds are employed to report on activities financed primarily by revenues generated by the activities themselves, such as a municipal utility. Fiduciary funds contain resources held by a government but belonging to individuals or entities other than the government.

What is a proprietary fund 401k?

What exactly is a proprietary fund? A proprietary fund is a mutual fund that is owned and managed by your 401k record keeper. As with mutual funds, proprietary funds charge fees for the money management. The amount charged annually goes directly into the brokerage house coffers.

What do proprietary funds focus on?

Proprietary funds use the flow of economic resources measurement focus — a focus similar to that used by commercial entities. Proprietary funds focus on whether the enterprise is economically better off as a result of the events and transactions that occurred during the fiscal period reported.

What are proprietary funds and how are they treated in accounting?

A proprietary fund is used in governmental accounting to account for activities that involve business-like interactions, either within the government or outside of it. These activities are similar to what would be found in the private sector, so the reporting resembles what would be used by a private business.

What are 3 types of funds?

There are three major types of funds. These types are governmental, proprietary, and fiduciary.

What are the 5 types of governmental funds?

Governmental funds are classified into five fund types: general, special revenue, capital projects, debt service, and permanent funds.

What are the 4 fiduciary funds?

A fiduciary fund is used in governmental accounting to report on assets held in trust for others....The fiduciary funds classification includes the following funds:Agency funds. ... Investment trust funds. ... Pension and employee benefit trust funds. ... Private-purpose trust funds.

Does Fidelity have proprietary funds?

While Fidelity can hold many mutual funds, proprietary mutual funds cannot be transferred. Generally, proprietary funds are offered exclusively by the issuer and cannot be held by other firms. Fidelity FundsNetwork® lists funds which are not proprietary and can be transferred without liquidation.

What are proprietary investment products?

Proprietary products are investment vehicles issued by the same financial institution that is advising the client. In other words, your advisor is both the seller and manufacturer.

What are third party mutual funds?

A third-party distributor is an institution that sells or distributes mutual funds to investors for fund management companies. These entities generally have no direct relation to the fund itself. Partnerships between mutual fund companies and third-party distributors often come with various fees and provisions.

What are characteristics of proprietary funds including those unique to internal service and enterprise funds?

Proprietary funds consist of user charges collected by the government. It aids the government in managing the resources efficiently. Internal service funds account for the internal financial transactions and the enterprise funds account for the external financial transactions.

What are the three basic statements of proprietary fund accounting?

Proprietary Funds Financial StatementsStatement of net position,Statement of revenues, expenses, and changes in fund net position, and.

Which of the following are required basic statements of a proprietary fund?

The operating statement required as one of the three basic financial statements for proprietary funds is called the statement of revenues, expenditures, and changes in fund net assets.

Why are proprietary funds created?

Proprietary Funds are created in order to record and account for transactions in government-related activities. The main premise behind proprietary funds is to account for investments related issues. Accounting for proprietary-related funds is similar to that of investor-owned businesses.

Why are public funds considered proprietary funds?

Therefore, they are classified as proprietary funds, because they are treated as such in the financial records of the company.

How do Propitiatory Funds Work?

Proprietary Funds are broadly classified into two categories. They include enterprise funds and internal service funds. As far as an enterprise fund is concerned, it can be seen that it is mainly used in order to account for any activity for which external users are charged a subsequent fee against those goods and services. An activity is categorized under enterprise fund only if it meets the following criteria;

What are some examples of internal service funds?

Additionally, it can be stated that generally, examples of Internal Service Funds include general purchases, as well as information systems. On the contrary, examples of external funds include public utilities, as well as airports. This respective categorization is used in order to classify the proprietary funds.

How is an activity funded?

The activity is funded using debt. This debt can only be secured by a stated pledge from the net proceeds from the activity. The activity’s stated provision costs are meant to be covered with the stated fees, under the mentioned rules and regulations. The stated activity’s pricing policy is designed to recover its cost.

What is stated activity pricing policy?

The stated activity’s pricing policy is designed to recover its cost.

Do proprietary funds have to be recorded in financial statements?

Hence, proprietary funds are recorded in the financial statements depending on their expenses.

How do you know if you own a proprietary fund?

Look for the name of your broker or custodian on funds you own. If you see a match, you’ve got a proprietary fund. That being the case, my suggestion is to make darn sure it’s the best choice by evaluating your mutual fund and the alternatives available to you. My bet is that you’ll quickly get out from under and move on.

Why do brokerage firms offer proprietary funds?

For the money. They do it for the money. You see, every mutual fund charges fees. Those annual fees range from a measly .15% to as high as 2.5%.

What are the drawbacks of proprietary funds?

As I said at the start of this post, proprietary funds have a few big drawbacks. First, they are typically very expensive. You have to check this on a case-by-case basis but that’s very easy to do. All you have to do is read the mutual fund prospectus. It’s easy to determine what the broker is charging for these funds. Every time I look at proprietary funds I always find that the fees are outrageously and unjustifiably high.

What to do if a broker suggests you buy a proprietary fund?

If a broker does suggest that you buy a proprietary fund, ask her to explain why. Demand to see the track record and fee schedule. While you’re at it, ask to see some competing ideas and then ask your advisor to explain why the proprietary fund is the best choice. That should be a very interesting conversation.

Is proprietary investing bad?

If you are an investor you may own a proprietary fund and not even be aware of it. That’s bad news because these funds are expensive and typically perform very poorly. Worse, they belie the relationship between you and your financial advisor.

Do you have proprietary funds in 401(k)?

You may have a proprietary fund and not even be aware of it . If you have a 401k or 403b, many plan sponsors have proprietary funds within the plan. Even if you have money at a discount broker, many have proprietary funds and try to get investors to buy them.

What is a proprietary fund?

Proprietary Fund. A mutual fund sponsored and managed by a certain financial institution. For example, all funds managed by Bank XYZ are considered Bank XYZ's proprietary funds. While some financial institutions offer other institutions funds along with their own, many only sell their own proprietary funds to investors.

Who sells mutual funds?

Proprietary mutual funds are offered for sale by the financial institution -- such as a bank, investment company, or brokerage firm -- that sponsors the funds.

Do some institutions market only their own funds?

Some institutions market only their proprietary funds, while others offer both their own funds and funds sponsored by others.

What is the purpose of the government's proprietary funds?

Proprietary funds are a government tool for keeping track of the money involved.

Why are proprietary funds controversial?

These funds are controversial because whatever fees the fund generates go back to the brokerage.

How are enterprise funds financed?

Enterprise funds can be financed by debt that will be paid off from future revenues. Others operate on a pay-as-you-go basis, using fees for services or goods to cover the budget. If it's a legal or policy requirement that the fund pay for itself, it has to be identified as an enterprise fund in the government's account books.

Why is cash flow important in a proprietary fund?

The cash flow statement is important for proprietary funds. It lets readers in the government or the wider community see how effective the fund is at paying for the services it provides.

What are enterprise funds in schools?

Enterprise funds in schools include the cafeteria, bookstores and athletic stadiums that sell tickets to events. State lottery tickets and workers' compensation funds would also qualify.

Why are house funds called house funds?

They're also known as "house funds" because they're set up in house. They're a product the brokerage creates and sells to clients rather than one run by a separate business. If someone invests in them, there's no way to transfer their fund holdings to another brokerage.

What is internal service fund?

The Internal Service Fund. An internal service fund operates similarly to an enterprise fund, but it deals with other parts of the government. For example, suppose a school district operates a central warehouse for school supplies and a central printing office.

What is a company's proprietary asset?

Company Proprietary Asset means any Proprietary Asset owned by or licensed to the Company or otherwise used by the Company.

What is proprietary information?

Proprietary Information and Technology means any and all of the following: works of authorship, computer programs, source code and executable code, whether embodied in software, firmware or otherwise, assemblers, applets, compilers, user interfaces, application programming interfaces, protocols, architectures, documentation, annotations, comments, designs, files, records, schematics, test methodologies, test vectors, emulation and simulation tools and reports, hardware development tools, models, tooling, prototypes, breadboards and other devices, data, data structures, databases, data compilations and collections, inventions (whether or not patentable), invention disclosures, discoveries, improvements, technology, proprietary and confidential ideas and information, know-how and information maintained as trade secrets, tools, concepts, techniques, methods, processes, formulae, patterns, algorithms and specifications, customer lists and supplier lists and any and all instantiations or embodiments of the foregoing or any Intellectual Property Rights in any form and embodied in any media.

What is proprietary data?

Proprietary Data means Data embodying trade secrets developed at private expense or commercial or financial information that is privileged or confidential, and that includes a restrictive notice, unless the Data is:

What is proprietary technology?

Proprietary Technology means the technical innovations that are unique and legally owned or licensed by a business and includes, without limitation, those innovations that are patented, patent pending, a subject of trade secrets, or copyrighted.

Is proprietary information the same as confidential information?

Proprietary Information shall have the same meaning as Confidential Information .

What is proprietary fund?

A mutual fund sponsored and managed by a certain financial institution. For example, all funds managed by Bank XYZ are considered Bank XYZ 's proprietary funds. While some financial institutions offer other institutions funds along with their own, many only sell their own proprietary funds to investors.

What is fund family?

Fund families involved in plan design work with plan sponsors to create menus that serve the interests of plan participants, but they also have an incentive to promote their own proprietary fundswhen more suitable options may be available from other fund families.

Who sells mutual funds?

Proprietary mutual funds are offered for sale by the financial institution -- such as a bank, investment company, or brokerage firm -- that sponsors the funds.

Do some institutions market only their own funds?

Some institutions market only their proprietary funds, while others offer both their own funds and funds sponsored by others.

How are proprietary funds presented?

Proprietary funds are presented using the economic resources measurement focus and the full accrual basis of accounting. They are reported the same way as in the government-wide financial statements. However, internal service funds should be reported as a fund type (aggregated) in a separate column. Major enterprise funds are reported in separate columns and nonmajor enterprise funds are aggregated in a single column. A combined total column for all enterprise funds should be presented. By reporting the internal service funds separately from the proprietary funds, the information in the Totals column in these statements flows directly to the Business-Type Activities column on the government-wide statement of net position. The interfund eliminations within enterprise funds are not required.

What is the focus of governmental and proprietary fund financial statements?

The focus of governmental and proprietary fund financial statements is on major funds. Back to top. 3.1.1.40 Types of funds. In fund financial statements, governments should report governmental, proprietary, and fiduciary funds to the extent that they have activities that meet the criteria for using these funds.

What is proceeds of specific revenue sources?

The term proceeds of specific revenue sources establishes that one or more specific restricted or committed revenues should be foundation for a special revenue fund. They should be expected to continue to comprise a substantial portion of the inflows reported in the fund. While GASB Statement 54 has not provided a numeric range for substantial portion of inflows, it was recommended that at least 20 percent is a reasonable limit for reporting a special revenue fund. Local governments need to consider factors such as past resource history, future resource expectations and unusual current year inflows such as debt proceeds in their analysis.

What is a government fund?

A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segrega ted for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Fund financial statements should be used to report detailed information about primary government, including its blended component units. The focus of governmental and proprietary fund financial statements is on major funds.

What should a government-wide financial statement show?

The reporting entity's government-wide financial statements should display information about the reporting government as a whole distinguishing between the total primary government and its discretely presented component units as well as between the primary government's governmental and business-type activities.

Can a local government have multiple subfunds?

Although a local government has to report only one general fund in its external financial reports, the government can have multiple general subfunds for its internal managerial purposes. These managerial subfunds have to be combined into one general fund for external financial reporting. Back to top.