GASB Proposal Addresses Reporting on Component Units, Equity Interest Transactions


GASB issued an exposure draft of a proposed statement, The Financial Reporting Entity, an amendment of GASB Statements No. 14 and No. 34. The proposed statement is intended to improve guidance for including, presenting and disclosing information about component units and equity interest transactions of a financial reporting entity.

 

Component units are legally separate organizations that state and local governments include in their financial reports. The proposal would modify the existing criteria for inclusion of organizations that are “fiscally dependent” on a government by adding a requirement that the potential component unit and the primary government also have a financial benefit or burden relationship. In cases where the government determines it would be misleading to exclude an organization that does not meet the financial accountability concept from its financial reports, the proposal would clarify how that determination should be made.

 

The proposal also would amend the criteria for “blending,” or the reporting of component units as if they were part of the primary government. It also would clarify the reporting of equity interests in legally separate organizations. Provisions of the proposal would be effective for financial statements for periods beginning after June 15, 2012, with earlier application encouraged.

 

Comments are due June 30. The ED may be downloaded from gasb.org/exp. GASB plans to have a public hearing on the proposal at its regular meeting on Aug. 3, beginning at 1 p.m. at its offices in Norwalk, Conn.

 

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Economy and health care changes top CPAs’ list

CPA decision-makers’ economic outlook and the House Republicans’ proposed tax changes as part of replacing the Patient Protection and Affordable Care Act received attention recently. See how much you know with this short quiz.