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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 23 – Extraordinary and Special Items

Report the following items at the bottom of the operating statement after “Other Financing Sources (Uses)” and disclose in Note 23. If both occur in the same fiscal year, report each item separately within the “Extraordinary and Special Items” section, with special items reported first.

  • Extraordinary Items are transactions or other events that are both unusual in nature and infrequent in occurrence.
  • Special Items are significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence and should be reported on the operating statement before extraordinary items.
  • Insurance recovery payments for impaired capital assets when realized (GASB 42, paragraph 21) (FEMA is not considered insurance). For more information on reporting insurance recoveries for impaired capital assets as special or extraordinary items, see Reporting Impairment Amounts in the AFR and in USAS.

Disclose the following item in Note 23 but do not report separately at the bottom of the operating statement:

  • Significant transactions or other events that are either unusual or infrequent but are not within the control of management (GASB 34, paragraph 89).

GASB 34, paragraph 55, incorporated the definition of extraordinary items as provided in the Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, as amended and interpreted. APB 30 states that judgment is required and unless the evidence clearly supports its classification as an extraordinary item, an event or transaction is presumed to be an ordinary and usual activity.

Unusual in nature, as defined by APB 30, means the underlying event or transaction possesses a high degree of abnormality and be of a type clearly unrelated to, or only incidentally related to, the ordinary and typical activities of the agency, taking into account the environment in which the agency operates. Unusual in nature takes into account the type and scope of agency operations, operating policies, the environment in which the agency operates and factors such as the geographical location of the agency operations. Unusual in nature is not established by the fact that an event or transaction is beyond the control of management.

Infrequent in occurrence, as defined by APB 30, means the underlying event or transaction is of a type that would not reasonably be expected to recur in the foreseeable future, taking into account the environment in which the agency operates. Determining the probability of recurrence of a particular event or transaction in the foreseeable future should take into account the environment in which an agency operates. The past occurrence of an event or transaction for a particular agency provides evidence to assess the probability of recurrence of that type of event or transaction in the foreseeable future. An event or transaction of a type that occurs frequently in the environment in which the agency operates cannot, by definition, be considered as extraordinary regardless of its financial effect.

Agencies must disclose in Note 23 all special or extraordinary items regardless of the amount. The information is consolidated on a statewide basis to determine the significance of the item on a statewide basis. Only significant amounts on a statewide basis are disclosed in the CAFR per GASB requirements.

NOTE: Hurricanes would not be considered a special or extraordinary item in Texas since hurricanes could reasonably be expected to recur in the foreseeable future and the hurricane is not within the control of management.

Submit a copy of the agency’s Note 23 from its published AFR through the ONDSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note number/name. If Note 23 does not apply, do not submit a note to indicate “not applicable.”

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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