Are Agency Funds included in the Statement of Changes in Net Position?

Agency funds are not included in the Statement of Changes in Net Position because they do not have revenues or expenses. Agency funds are used by governments to hold and manage resources that belong to other entities or individuals, such as those held in trust for others or for governmental entities that do not require the government to recognize revenues or expenses.

Since these funds act merely as custodians, they report assets and liabilities but not the net position or any changes in net position. This absence of revenues and expenditures means they do not impact the governmental entity's financial performance as captured in the Statement of Changes in Net Position, reinforcing why they are excluded from this financial statement. Thus, the fundamental nature of agency funds aligns with the reasoning for their exclusion.