Fiduciary or Trust Accounting is the process of classifying, summarising, and recording of financial transactions related to settlement, estates, and trust entities and the communication of periodic reports to such entity.
Fiduciary Accounting is largely carried out on a cash basis where cash is recorded when received and disbursement and distributions were recorded when actually paid as authorized
Those required to render fiduciary accounting maybe executors, trustees, or administrators and they are required to issue periodic reports to beneficiaries and principal
Also, the financial administration of a fund entrusted in an escrow is also in the purview of Trust Accounting
In trust accounting, knowledge of the law, estate management and related courses are of immense benefits to an accountant.
In Trust Accounting, it is essential that the standing of account ledger is clearly stated and understood. The account should contain a precise summary of its transaction that is detailed and sufficient to inform interested parties of significant information. And as in financial accounting, gains and losses should be separately shown in a schedule. Moreover, these are the basic principles of fiduciary Accounting
Fiduciary Accounting is a very sensitive branch of Accounting that often requires a qualified accountant of Chartered Public Accountant (CPA level). But, in the absence of such qualifications, An accountant with a proven record in estate management and related field can act in absentia.