Final answer:
Fiduciary activities not governed by formal trust arrangements are reported in custodial funds, which involve the government holding resources for others. These differ from formal trusts and ensure transparency in governmental fiduciary responsibilities.
Step-by-step explanation:
Fiduciary activities that are not governed by formal trust arrangements are reported in custodial funds. These activities involve the government holding resources in a custodial capacity for individuals, private organizations, or other governments. The fiduciary activities conducted by a government entity include collecting taxes, maintaining pension funds, or other escrow-type transactions. It is important to distinguish between the funds held in trust, which are typically formal arrangements, and custodial funds, which may not necessarily be held under a trust arrangement but still require the government to act in a fiduciary capacity. Such activities are accounted for separately from traditional government funds to ensure transparency and proper financial management.
Regarding debts held by government trust funds rather than the public, this refers to situations where different parts of the government owe each other money. It highlights an internal aspect of governmental financial management and transactions where one sector of the government acts as both creditor and debtor. This illustrates the complexity of government financing and the need for comprehensive fiduciary responsibility and reporting.