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Business Procedures Manual

17.3 Financial Reporting

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Governmental Accounting Standards Board (GASB) Statement No. 39, Determining Whether Certain Organizations are component Unit - an amendment of Statement No. 14, requires that the financial statements of foundations and affiliated organizations that meet the criteria to be considered component units of an institution be included with the financial statements of the institution. An organization is considered a component unit if it is a legally separate, tax-exempt entity, and if it meets the criteria for materiality and/or is significant to the institution. An organization would be considered significant if it would be misleading to exclude it from the financial statements.

An example is a research foundation whose assets are not material and the dollar amount contributed to the university was not material, but the value of the organization to the research mission of the university is critical.

The criteria for materiality are as follows:

  1. The economic resources received or held by the separate affiliated organization are entirely or almost entirely for the direct benefit of the institution, its component units or its constituents.

  2. The institution, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the affiliated organization.

  3. The economic resources received or held by the individual affiliated organization that the institution, or its component units, is entitled to, or has the ability to otherwise access, are significant to the institution.

If it is determined that the foundation or affiliated organization is a component unit of the institution and the financial statements must be included, then the institution must determine if discrete (separate columns) or blended (combined with the institution statements) presentation is required. For most of the institutions within the University System of Georgia, the discrete presentation will be used.

Most of the foundations and/or affiliated organizations comply with the Financial Standards Board (FASB) requirements instead of the GASB requirements. Starting with the FY2004 Annual Financial Report (AFR), institutions will present their reports and any component units that use GASB reporting on one page (in separate columns), and any component unit that use FASB reporting on the following page (in separate columns). This is the discrete presentation.