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Business and Policy Areas
Business and Policy Areas

GASB Releases Omnibus Statement

March 31, 2017

In an attempt to clarify issues that have surfaced during the implementation of certain GASB standards, the Governmental Accounting Standards Board released Statement No. 85, “Omnibus 2017,” on March 20. The clarification should assist public institutions that have been debating internally, and with auditors, previously issued guidance on blending.

Essentially, certain preparers and auditors had concluded that a governmental business-type activity reporting in a single column should blend any component unit, rather than only those component units that meet the criteria for blending in paragraph 53 of Statement 14. Statement 85 reinforces the use of paragraph 53, Statement 14, as the sole source of guidance to determine when blending is appropriate.

However, when evaluating the criteria for blending, public institutions must keep in mind that Statement 14 has been amended by GASB Statements No. 61, “The Financial Reporting Entity Omnibus,” and No. 80, “Blending Requirements for Certain Component Units.” Since GASB does not issue amended statements, one has to look in GASB’s Codification by topic or manually track amendments.

The following paragraph contains NACUBO’s tracking of the amended guidance:

Paragraph 53 of Statement 14, as amended (emphasis added for amendments)
A component unit should be included in the reporting entity’s financial statements using the blending method in any of these circumstances:

a. The component unit’s governing body is substantively the same as the governing body of the primary government and

  1. There is a financial benefit or burden relationship between the primary government and the component unit, as described in paragraphs 27–33, or
  2. Management of the primary government has operational responsibility for the component unit. This occurs when it manages the activities of the component unit in essentially the same manner in which it manages its own programs, departments, or agencies. Management, for purposes of this determination, consists of the person(s), below the level of the governing board, responsible for the day-to-day operations of the primary government (for example, a county executive or city manager).

b. The component unit provides services entirely, or almost entirely, to the primary government, or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide services directly to it. The essence of this type of arrangement is much the same as an internal service fund: The goods or services are provided to the government itself rather than to the citizenry. Usually, the services provided by a blended component unit are financing services provided solely to the primary government. For example, a building authority may be created to finance the construction of office buildings for the primary government. However, a component unit that provides services to more than just the primary government should also be blended if the services provided to others are insignificant to the overall activities of the component unit. Other component units that should be blended are those that exclusively, or almost exclusively, benefit the primary government by providing services indirectly—for example, a component unit that provides services on behalf of the primary government to its employees rather than directly to the primary government itself.

c. The component unit’s total debt outstanding, including leases, is expected to be repaid entirely or almost entirely with resources of the primary government. Repayment generally occurs through a continuing pledge and appropriation by the primary government to the component unit that, in turn, pledges those appropriation payments as the primary source of repayment for its debt.

d. The component unit is organized as a not-for-profit corporation in which the primary government is the sole corporate member as identified in the component unit’s articles of incorporation or bylaws, and the component unit is included in the financial reporting entity pursuant to the provisions in paragraphs 21-37 of Statement 14, as amended.


Sue Menditto
Director, Accounting Policy