Note X – Major Component Units

Note X – Major Component Units

A template for this note is not available. See “Instructions to preparer:” for various disclosures that may be required.

Instructions to preparer:

The determination that the component unit is a major should be based on the nature and significance of its relationship with to the primary government. The determination generally would be based on any of the following factors: (1) the services provided by the component unit to the citizenry are such that separate reporting as a major component unit is considered to be essential to financial statement users, (2) there are significant transactions with the primary government, or (3) there is a significant benefit or burden relationship with the primary government.
Governmental Accounting Standards Board (GASB) Statement 14 and GASB Statement 61.

The major component units can be presented in the following ways:

  1. Separate columns in the government wide financial statements,

  2. Combining statements included in basic financial statements, or

  3. Condensed financial statements within the notes to the financial statements.

If combining statements are used for presentation they are required to show the major component units (each in a separate column), the aggregate of all non-major component units in one column, and a total column.

If note disclosure is used to report major component units the city/county/district is required to present condensed financial statements. The following information should be displayed.

a. Condensed statement of net position:

  1. Total assets distinguishing between capital assets and other assets. Amounts receivable from the primary government should be reported separately;

  2. Total deferred outflows of resources;

  3. Total liabilities distinguishing between long-term debt and other liabilities. Amounts payable to the primary government should be reported separately;

  4. Total deferred inflows of resources;

  5. Total net position distinguishing among restricted (separately reporting expendable and nonexpendable components); unrestricted; and amounts of net investment in capital assets.

b. Condensed statement of activities (for units engaged in governmental activities):

  1. Expenses by major function (and unallocated depreciation if reported in a separate line);

  2. Program revenues by type;

  3. Net program (expense) revenue;

  4. Tax revenues;

  5. Other nontax general revenues;

  6. Contributions to endowments and permanent funds principal;

  7. Special and extraordinary items;

  8. Change in net position;

  9. Beginning net position; and

  10. Ending net position.

c. Condensed statement of revenues, expenses, and changes in net position (for units engaged in business-type activities):

  1. Operating revenue (by major source);

  2. Operating expenses (depreciation/amortization should be identified separately);

  3. Operating income (loss);

  4. Nonoperating revenues (expenses) by major items;

  5. Capital contributions and additions to permanent and term endowments;

  6. Special and extraordinary items;

  7. Transfers;

  8. Change in net position;

  9. Beginning net position; and

  10. Ending net position.

Condensed statement of cash flows is not required.

If the city/county/district has major component units separate information may also need to be presented in the notes for investments, capital assets, and long-term debt, if that information is significant to the government. This information may be displayed in the same note (i.e., long-term debt, etc.); however, it should be shown separately from the city/county/district’s information.