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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

Notes & Samples

NOTE 19 – The Financial Reporting Entity
Sample (Illustrative, may not tie to exhibits)

The Financial Reporting Entity

As required by the generally accepted accounting principles, the financial statements present Sample Agency and its component units. The component units discussed in this note are included in Sample Agency’s reporting entity because of the significance of their operational or financial relationships with the Sample Agency.

Individual Component Unit Disclosures

Blended Component Units — A five-member board appointed by the Sample Agency board governs the Sample Component Building Authority (SCBA). Although it is legally separate from the Sample Agency, the SCBA is reported as if it were part of the primary government because its sole purpose is to finance and construct Sample Agency’s public buildings. The SCBA’s financial data is reported as a capital projects fund (USAS D22 fund XXXX) on the combining statement of revenues, expenditures and changes in fund balances — capital projects funds in Sample Agency’s AFR.

Discretely Presented Component Units — Sample Agency is financially accountable for the following legally separate entities (Component Units); however, they do not provide services entirely or almost entirely to the Sample Agency. The component units are reported in a separate column on the combined financial statements. Except for the Sample Component School District (SCSD), the Sample Agency board appoints the governing bodies of all component units. SCSD’s board is elected by the citizens of Major City.

Complete financial statements of the individual component units can be obtained from their respective administrative offices.

Administrative Offices

Administrative Offices
Sample Component Building Authority
665 Main Street
Major City
Sample Component School District
112 Education Street
Major City
Sample Component Parks and Recreation Commission
789 Parks Drive
Eastville
Sample Component Airport Authority
10 Airport Road
Westburg
Sample Component Transit Authority
123 Trolley Avenue
Major City
 

Related Organizations

The Sample Agency’s officials are also responsible for appointing the members of the boards of other organizations, but Sample Agency’s accountability for these organizations does not extend beyond making the appointments. The Sample Agency board chairman or specific committees of the Sample Agency board appoint the board members of the Sample Conservation Commission, the Bicentennial Commission and the Economic Development Association. In 20CY, the Sample Agency appropriated operating grants of $1,000 and $5,000 to the Bicentennial Commission and the Economic Development Association, respectively.

Joint Ventures

The Sample Agency is a participant with Major City (the city) in a joint venture to operate Memorial Stadium, a sports and recreation facility. The Memorial Stadium Authority (MSA), a public benefit corporation, was created for that purpose. On dissolution of the corporation, the Sample Agency and the city will share the net position of the MSA equally. A six-member board composed of three appointees from the Sample Agency and three from the city governs the MSA. The Sample Agency and the city are each obligated by contract to remit $250,000 annually to supplement the MSA’s operating revenues and are each entitled to one-half of the MSA’s annual operating income (if any). In accordance with the joint venture agreement, the MSA remitted $350,000 to the Sample Agency for 20CY. The Sample Agency’s net investment and its share of the operating results of the MSA are reported in the Sample Agency’s recreation fund (an enterprise fund). The Sample Agency’s equity interest in the MSA was $2.3 million at Aug. 31, 20CY. Complete financial statements for the MSA can be obtained from the MSA’s administrative office at 460 Stadium Drive, Major City, or from the Sample Agency.

Jointly Governed Organizations

The Sample Agency, in conjunction with North and South counties and the cities of Eastville, Westburg and Major City, has created the Regional Planning Commission (RPC). The RPC’s board is composed of three members from Sample Agency, three members from each of the county boards and one member from the governing board of each of the three municipalities. The Sample Agency appropriated $60,000 for an operating grant to the RPC for 20CY.

Related Parties

In order for Sample Agency to have a controlled source of concrete for its capital projects, Sample Agency owns the majority equity interest in Concrete Plant Inc. This allows Sample Agency to further enhance its ability to provide services to the citizenry. Therefore, Concrete Plant Inc. is reported as a discrete component unit.

During fiscal 20CY, Sample Agency entered into a purchase agreement for Concrete Plant Inc. to provide concrete to Sample Agency for the purpose of building Sample Agency’s Community Center. As of Aug. 31, 20CY, Sample Agency paid $10,000.00 to Concrete Plant Inc. for the purchase of concrete products. These transactions are reported in Sample Agency’s AFR as a capital projects fund (USAS D22 fund XXXX) on the combining statement of revenues, expenses and changes in fund balances — capital projects funds.

As of Aug. 31, 20CY, Sample Agency also incurred $5,000.00 in payables related to concrete materials delivered by Concrete Plant Inc. that Sample Agency has not yet paid for. In accordance with the purchase agreement, the balance will be paid in full by Oct. 31, 20CY.