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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

The Financial Reporting Entity

The financial reporting entity of the state of Texas includes not only all state agencies (and institutions of higher education), but also those outside organizations for which agencies are financially accountable. The financial reporting entity also includes other organizations whose nature and significance of their relationships with an agency are such that exclusion would cause the agency’s financial statements to be misleading.

An agency may determine an outside organization to be a:

  • Component unit
  • Related organization
  • Joint venture
  • Jointly governed organization
  • Related party
  • Limited liability company

Depending on the type of relationship, the financial activities of the legally separate organization may need to be included in the agency’s financial statements and in the notes to the financial statements — or a note disclosure may be the only requirement.

According to GASB 100, “changes to or within the financial reporting entity” meets the classification of an accounting change and requires certain financial statement adjustments and note disclosures (for example: a change in a component unit’s presentation as blended or discretely presented; or a change in a fund’s presentation as major or nonmajor).

For more information on qualifying changes, reporting and disclosure requirements for changes to or within the financial reporting entity, see Note 14’s Changes To or Within the Financial Reporting Agency.