Special-purpose governments engaged only in governmental activities

Some governmental entities are engaged only in a single program. Some examples include cemetery districts, levee districts, assessment districts, and drainage districts.

For these entities engaged only in a single program, the fund financial statements and government-wide statements may be combined using a columnar format. This format would present the reconciling items in separate columns as opposed to presenting them at the bottom of the statement.

However, a special-purpose government engaged only in governmental activities may also present separate fund financial statements and government-wide statements. In this case, it may use a different format to report the statement of activities. This alternative format presents the statement in a single column by reporting expenses first, followed by program revenues and then general revenues. Other items, like special and extraordinary items and transfers, would then be reported.

Knowledge check

1. Choose the correct statement regarding special-purpose governments.
   1. Special-purpose governments engaged in more than one program or that engage in both governmental and business-type activities should produce both fund financial statements and government-wide financial statements.
   2. All special-purpose governments report government-wide statements.
   3. For special-purpose governments engaged only in a single program or only in a business-type or fiduciary activity, different financial statements are not appropriate.
   4. Special-purpose governments are not separate legal entities.

Special-purpose governments engaged only in business-type activities

Some special-purpose governments are engaged only in business-type activities; these include entities such as water and electric authorities, housing authorities, public colleges and universities, and hospitals.

These entities report as special-purpose governments engaged only in business-type activities.

Business-type activities are reported as enterprise funds. Because information in fund financial statements for enterprise funds is basically the same information presented in government-wide statements for business-type activities, there is no need to present both types of statements. For this type of governmental entity, the basic financial statements and required supplementary information (RSI) comprise the following items:

• Management’s discussion and analysis (MD&A)
• Enterprise fund financial statements
  • Statement of net position or balance sheet
  • Statement of revenues, expenses, and changes in fund net position
  • Statement of cash flows
• Notes to the financial statements
• RSI (other than MD&A), if applicable

These entities follow the financial reporting requirements for enterprise funds.

Knowledge check

2. Which entity is an example of a special-purpose government engaged only in business-type activities?
   1. Cemetery district.
   2. Levee district.
   3. Electric authority.
   4. Drainage district.

Special-purpose governments engaged only in fiduciary activities

Some special-purpose governments are engaged only in fiduciary activities. Some examples include pension plans, other employee benefit trust funds, and investment trust funds.

These entities need report only the financial statements required for fiduciary funds. The basic financial statements and RSI for these entities comprise the following items:

• MD&A
• Statement of fiduciary net position
• Statement of changes in fiduciary net position
• Notes to the financial statements

The reporting format for pensions is defined by GASB Statement No. 67, Financial Reporting for Pension Plans — An Amendment of GASB Statement No. 25, as amended.

Note that a special-purpose government may be engaged in both business-type and fiduciary activities. In this case, the government should present the financial statements for both enterprise funds and fiduciary funds.

Public colleges and universities

GASB Statement No. 35, Basic Financial Statements — and Management’s Discussion and Analysis — for Public Colleges and Universities — an Amendment of GASB Statement No. 34, extends the reporting requirements for special-purpose governments of GASB Statement No. 34 to public colleges and universities.

This statement allows colleges and universities issuing separate financial statements to select the reporting requirements for special-purpose governments engaged only in business-type activities, engaged only in governmental activities, or engaged in both governmental and business-type activities.

Most public colleges and universities report as special-purpose governments engaged only in business-type activities. In such cases, the reporting requirements are as follows:

• MD&A)
• Enterprise fund financial statements
  • Statement of net position or balance sheet
  • Statement of revenues, expenses, and changes in fund net position
  • Statement of cash flows
• Notes to the financial statements
• RSI (other than MD&A), if applicable

An example of the fund financial statements for a university is in appendix D.