Chapter 11 - Issues of reporting, disclosure, and financial analysis. In this chapter, the learning objectives are: Conversion of Fund statements to government-wide, why the make-up of a government’s or not-for-profit’s reporting entity is an issue, the criteria that the GASB has established to determine the units that constitute a government’s reporting entity,. | Chapter 11 Issues of Reporting, Disclosure, and Financial Analysis © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Learning Objectives Conversion of Fund Statements to Government-wide Why the make-up of a government’s or not-for-profit’s reporting entity is an issue The criteria that the GASB has established to determine the units that constitute a government’s reporting entity Various ways of reporting component units Reports of special-purpose entities Main elements of a government’s CAFR Critical factors to consider in assessing a government’s financial condition © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 © 2016 John Wiley & Sons, Inc. All rights reserved. 3 General Approach to convert governmental funds statement to government-wide statement Reporting Entity Why is the reporting entity an issue? An organization’s legal entity may differ from its economic entity. Composition of reporting entity includes Primary government (Creating government) Component units . | Chapter 11 Issues of Reporting, Disclosure, and Financial Analysis © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Learning Objectives Conversion of Fund Statements to Government-wide Why the make-up of a government’s or not-for-profit’s reporting entity is an issue The criteria that the GASB has established to determine the units that constitute a government’s reporting entity Various ways of reporting component units Reports of special-purpose entities Main elements of a government’s CAFR Critical factors to consider in assessing a government’s financial condition © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 © 2016 John Wiley & Sons, Inc. All rights reserved. 3 General Approach to convert governmental funds statement to government-wide statement Reporting Entity Why is the reporting entity an issue? An organization’s legal entity may differ from its economic entity. Composition of reporting entity includes Primary government (Creating government) Component units (Created government) © 2016 John Wiley & Sons, Inc. All rights reserved. 4 4 Reporting Entity Primary government any state government, general purpose local governments, or a special purpose state or local government Special purpose government must: have a separately elected governing body be legally separate from other primary governments be fiscally independent of other governments have authority to determine its budget, levy taxes, and issue bonds Component unit Legally separate government for which elected officials of primary government are financially accountable © 2016 John Wiley & Sons, Inc. All rights reserved. 5 5 © 2016 John Wiley & Sons, Inc. All rights reserved. 6 Flowchart for Evaluation and Presentation Component Units Figure 11-1 6 Reporting Entity Exclusion of component unit might cause the primary government’s statements to be misleading. Example: State of New York established Municipal Assistance Corporation to help the City of New York during financial difficulties.
