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THE REPORTING ENTITY GASB #14
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The Reporting Entity includes: A.The “Primary Government” (PG); B.Those the PG is “financially accountable” for; and, C.All Others deemed to be “significant”.
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A. The Primary Government (PG) PG is defined as an entity whose Board is elected by citizens, legally separate, and fiscally independent of other entities. It can: 1)Determine its own budget 2)Levy taxes 3)Issue bonded debt In order to be a PG, must be able to do all 3 without needing approval by another govt.
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B.Those for which the PG is “Financially Accountable” To be “financially accountable”: 1)PG appoints a voting majority of CU governing body, AND: a)is able to impose its will; OR, b)there is a potential for the CU to provide specific financial benefits or impose financial burdens on the PG.
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“financially accountable” (cont.) 2)Regardless of the previous condition, PG may be financially accountable if the CU is fiscally dependent on it.
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C. OTHERS, if significant Examples include: –Finance Authorities created to issue debt on behalf of the local government and serves as a conduit for repayment (off balance sheet financing) –Educational Foundations
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“Impose Its Will” Defined: The PG can impose its will if it can: unilaterally abolish the CU; remove Board members; hire/fire managers; modify or approve budget or rate changes; veto decisions of the CU
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Benefits and Burdens A benefit or burden relationship exists if: 1)PG is legally entitled the CU’s resources (net income of the lottery, for example); OR, 2)PG assumes deficits of CU or provides financial support (state colleges); OR, 3)PG is obligated for the debt of a CU.
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Fiscally Dependent An example of fiscal dependency would be where a local school board, even though elected by the public or state, must obtain approval for the school district’s budget from a city – or perhaps the city must approve any tax levies.
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