Final answer:
A government agency must provide a Statement of Custodial Activities when it collects nonexchange funds to be turned over to the Treasury to ensure transparency and accountability.
Step-by-step explanation:
When a government agency collects nonexchange funds that are to be turned over to the Treasury, a Statement of Custodial Activities is required. This statement provides a detailed account of the funds collected by the agency on behalf of the government and how these funds have been managed before they're transferred to the Treasury.
It's part of the financial reporting process meant to ensure transparency and accountability in the handling of public funds, as well as to comply with the requirement for regular publication of the statement and account of receipts and expenditures of all public money.