Reporting Requirements for Annual Financial Reports of State Agencies and Universities
Notes & Samples
NOTE 14 – Adjustments to Beginning Net position, Fund Balances or Fund Net Position
Sample (Illustrative, may not tie to exhibits)
Submit a copy of the agency’s Note 14 from its published AFR through the RNSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note name/number. If Note 14 does not apply, do NOT submit a note to indicate “not applicable.”
The following exhibit reflects the application of certain requirements of Note 14 with the following most common circumstances:
- A change in the presentation of one of the financial reporting agency’s component units from blended to discrete.
- An addition of a component unit to the financial reporting agency.
- A correction of an error in previously issued financial statements affecting only governmental activities.
Sample Agency
Notes to the Financial Statements
for the Year Ended Aug. 31, 20X2
Note 14
Changes to or within the Financial Reporting Agency
Change in Component Unit Presentation (Column A)
QRS Foundation was previously reported as a blended component unit (in Enterprise Fund D) because its board was substantively the same as the Sample Agency. However, new legislation was passed during the year that prevents members of the Sample Agency from serving on the board. Therefore, because the board no longer is substantively the same as the Sample Agency, QRS Foundation no longer meets the requirements for presentation as a blended component unit and is discretely presented for the fiscal year ended Aug. 31, 20X2. The effects of that change to or within the financial reporting agency are shown in column A of the following table.
Addition of Discretely Presented Component Unit (Column B)
In 20X2, new legislation was passed that gives the Sample Agency the authority to approve and modify the budget of XYZ Foundation. Due to that change, XYZ Foundation now meets the requirements for inclusion as a discretely presented component unit for fiscal year ended Aug. 31, 20X2. The effect of that change to or within the financial reporting entity is shown in column B of the table below.
Correction of an Error in Previously Issued Financial Statements (Column C)
During fiscal year 20X2, Sample Agency determined that infrastructure assets related to a new development that were contributed by a private developer in the prior year were not reported. Therefore, capital assets, net of depreciation, were understated by $71.3 million for the fiscal year ended Aug. 31, 20X1. In addition, public works revenue from capital grants and contributions was understated by $72.6 million and public works expense for related depreciation was understated by $1.2 million for the fiscal year ended Aug. 31, 20X1. The effect of correcting that error is shown in column C of the following table.
Adjustments to and Restatements of Beginning Balance
During fiscal year 20X2, changes to or within the financial reporting agency and an error correction resulted in adjustments to and restatements of beginning net position and fund net position, as follows (amounts in thousands):
08/31/20X1 As Previously Reported | Change To or Within the Financial Reporting Agency (A) | Change To or Within the Financial Reporting Agency (B) | Error Correction (C) | 08/31/20X1 As Restated | |
---|---|---|---|---|---|
Government-Wide | |||||
Governmental Activities | $ 768,033 | $ 71,312 | $ 839,345 | ||
Business-Type Activities | 543,163 | (2,184) | 540,979 | ||
Total Primary Government | $ 1,311,196 | (2,184) | $ 71,312 | $ 1,381,324 | |
Governmental Funds | |||||
Major Funds: | |||||
General Fund | $ 631,607 | $ 631,607 | |||
Fund A | 1,000,922 | 1,000,922 | |||
Nonmajor Funds | 40,486 | 40,486 | |||
Total Governmental Funds | $ 773,015 | $ 773,015 | |||
Proprietary Funds | |||||
Major Funds: | |||||
Enterprise Fund C | $ 418,910 | $ 418,910 | |||
Enterprise Fund D | 74,831 | (2,184) | 72,647 | ||
Nonmajor Funds | 49,422 | 49,422 | |||
Total Proprietary Funds | $ 543,163 | (2,184) | $ 540,979 | ||
Fiduciary Funds | |||||
Pension and Other Employee Benefit Trust Funds | $ 3,071,227 | $ 3,071,227 | |||
Discretely Presented Component Units | |||||
ABC Authority | $ 1,696 | $ 1,696 | |||
QRS Foundation | 2,184 | 2,184 | |||
XYZ Foundation | 1,500 | 1,500 | |||
Nonmajor Component Units | 2,730 | 2,730 | |||
Total Discretely Presented Component Units | $ 4,426 | $ 2,184 | $ 1,500 | $ 8,110 |