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GASB Statement on Blending Component Units into Financial Statements Issued

Offering guidance on how certain nonprofit component units should be disclosed in financial statements, the Governmental Accounting Standards Board (“GASB”) has issued GASB Statement No. 80, Blending Requirements for Certain Component Units.

GASB Statement No. 80 clarifies the display requirements in GASB Statement No. 14, The Financial Reporting Entity, by calling for these component units to be incorporated into the main state or local government’s financial statements similarly to a department or activity under the primary government. The new guidance also focuses on reducing diversity in practice concerning the presentation of nonprofit organizations wherein the primary government is the lone corporate member.

Statement No. 80 impacts a select number of governmental units, including but not limited to public hospitals. The GASB expects the new guidance to improve the comparability of financial statements, as well as enhance the importance of this information for state and local government financial statement users.

The requirements under GASB Statement No. 80 are in effect for reporting periods starting after June 15, 2016. Early application is encouraged.

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