Accounts and Reports

GAAP POLICY AND PROCEDURE MANUAL

• The financial reporting entity consists of (a) the primary government, (b) organization for which the primary government is financially accountable, and (c) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity;s financial statements to be misleading or incomplete. GASB 14 Paragraph 12.
• Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the nature and significance of their relationship with a primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. GASB 14 Paragraph 20.
• Paragraph 42 of Statement 14 requires that "financial statements of the reporting entity should provide an overview of the entity based on financial accountability, yet allow users to distinguish between the primary government and its component units." Paragraph 11 states that ". . . the reporting entity's financial statements should . . . provide an overview of the discretely presented component units." GASB 34 Paragraph 124.
• Paragraph 51 of Statement 14, as amended by GASB 34, requires information about each major component unit to be provided in the basic financial statements of the reporting entity. Governments can satisfy that requirement by (a) presenting each major component unit in a separate column in the reporting entity;s statements of net assets and activities, (b) including combining statements of major component units in the reporting entity's basic statements after the fund financial statements, or (c) presenting condensed financial statements in the notes to the reporting entity's financial statements. The aggregated total component unit information, as discussed in paragraph 43 of Statement 14, should be the entity totals derived from the component units' statements of net assets and activities. GASB 34 Paragraph 126 as amended by GASB 37 paragraph 18.
• In addition to the financial statement information required by paragraph 126, the notes to the financial statements should disclose, for each major component unit, the nature and amount of significant transactions with the primary government and other component units. GASB 34 Paragraph 128.

• STARS does not distinguish between primary government or component unit.

• The auditors' opinion on the June 30, 1999 Annual Financial Report included the following: "The State has not implemented GASB 14 and has not made a determination of whether certain potential component units should be included in the reporting entity. The information needed to qualify the effects of such omissions is not reasonably determinable from the accounts and records of the State."
• The footnotes to the June 30, 1999 Annual Financial Report include the following: "For financial reporting purposes, the State of Kansas has included all funds and accounts of all State organization units as part of the primary government except the following:
  1. The Kansas Turnpike Authority.
  2. District Trial Court funds.
  3. Student union, athletic, cafeteria, foundation and endowment funds of State supported universities.
  4. Certain off-site custodial funds.
• The component units were determined to be Kansas Development Finance Authority (KDFA, agency 176 in STARS), Kansas Technology Enterprise Corporation (KTEC, agency 371 in STARS) and the entities associated with the Regents' Universities (not in STARS).
• KDFA and KTEC are discretely presented.
• The Universities' component units for GASB 14 are blended. A Determination will be made regarding presentation for GASB 39 component units.

• What is included and methods used (discrete or blended).
• Financial data for each major component unit if not presented in the basic financial statements.
• In addition to the financial statement information required by paragraph 126, the notes to the financial statements should disclose, for each major component unit, the nature and amount of significant transactions with the primary government and other component units.

• The following were considered to be custodial in nature and will not be included in the financial statements:
  • District Trial Court funds. Per consultants' recommendation on 3/12/01 these are reported in the financial statement of the County where the district courts are located. The consultants do not think they need to be reported again at the state level.
  • Certain off-site custodial funds. This item includes other miscellaneous items like advances for parcel post, advances for petty cash, and local funds that are held outside the system. Advances are initially recorded in Stars in the 72xx expenditure series but since the amounts were viewed as immaterial in a previous year they are not tracked.
• A separate audit report is issued for the Kansas Development Finance Authority (KDFA). It was determined to be a component unit that should be presented discretely. The State appoints a voting majority of KDFA's board and the State can impose its will on the KDFA. KDFA is not a blended component unit, since the KDFA board is not the same as the State's governing body and KDFA provides services to entities other than the State.
• A separate audit report is issued for the Kansas Technology Enterprises Corporation. (KTEC). It was determined to be a component unit that should be presented discretely. The state appoints a voting majority of KTEC board; the State can impose its will on KTEC; there is a potential the KTEC can impose a specific financial benefit or burden on the State; KTEC is fiscally dependent on the State. KTEC is not a blended component unit, since the board of KTEC is not the same as the State's governing body and KTEC provides services to entities other than the State.
• Kansas, Inc. could be considered a component unit. However, it is very small, and will not be reported as a component unit. State appropriations to Kansas, Inc. are included in the general fund.
• The two component units will be shown as separate columns in the financial statements rather than in the footnotes.
• The Kansas Turnpike Authority (KTA) was determined to NOT be a component unit. Although a majority of their board is appointed by the State, the State does not have its power to impose its will on the KTA; there is not a potential for the KTA to impose specific financial benefits or burdens on the State; KTA is not fiscally dependent on the State.

• Kansas Development Finance Authority
• Kansas Technology Enterprise Corporation.
• Universities