What statement is required for Agency Funds in managing assets and liabilities?

The correct answer is the Combining Statement of Changes in Assets and Liabilities. Agency Funds, which are a type of fiduciary fund, are used by governments to account for assets held on behalf of others, such as taxes collected for another government entity or funds held for individuals or organizations.

In the context of agency funds, the focus is on the inflows and outflows of resources, specifically the transactions that change the level of assets and liabilities within the fund. The Combining Statement of Changes in Assets and Liabilities provides a comprehensive overview of these transitions, reflecting the movement of funds through the agency and helping to show how resources have been managed over time.

This statement is essential because it allows stakeholders to understand the dynamics within agency funds, including any changes in the liabilities owed to third parties and the assets held by the agency. It complements other financial statements by providing detailed insights into the operational aspects of the agency funds, crucial for transparency and accountability in government operations.

Other statement options mentioned are not specific to the requirements for agency funds. For example, the Statement of Fund Balances and the Statement of Financial Position typically pertain to funds or entities other than agency funds. The Statement of Changes in Fiduciary Net Position is more relevant for pension and