GASB Updates the Reporting Entity Standard
December 29, 2010
On December 17, the Governmental Accounting Standards Board (GASB) issued Statement No. 61, “The Financial Reporting Entity: Omnibus.” Statement 61 amends the requirements of Statements No. 14, “The Financial Reporting Entity,” and No. 34, “Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments.”
Periodically the GASB revisits previously issued standards. The board only revisits guidance that has been around for at least a decade, thus ensuring that there has been sufficient practical experience with the standard. The issuance of Statement 61 is intended to better meet user needs and address reporting entity issues that have come to light since statements 14 and 34 were issued in 1991 and 1999, respectively.
Of greatest significance to public colleges and universities is that Statement 61 amends the criteria for blending—that is, reporting component units as if they were part of the primary government—in certain circumstances. The amendments to the criteria for blending will help ensure that only those component units that are so intertwined with the primary government will be reported as part of the governmental entity.
For public colleges and universities that use a single column business-type activity reporting format, the new guidance for reporting blended component units will require condensed combining information to be included in the notes to the financial statements. This additional information will allow users to better distinguish between the public institution and its component units.
The requirements of Statement 61 are effective for financial statements for periods beginning after June 15, 2012 – of FY13 for the vast majority of public institutions. The new statement will be sent to GASB literature subscribers or is available for purchase from GASB.
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