Chapter 17, Problem 36P

The City of Francois, Texas, has begun the process of producing its current comprehensive annual financial report (CAFR). Several organizations that operate within the city are related in some way to the primary government. The city’s accountant is attempting to determine how these organizations should be included in the reporting process.

  a.    What is the major criterion for inclusion in a government’s CAFR?

  b.    How does an activity or function quality as a special purpose government?

  c.    How is the legal separation of a special purpose government evaluated?

  d.    How is the fiscal independence of a special purpose government evaluated?

    e.    What is a component unit, and how is it normally reported on government-wide financial statements?

    f     How does a primary government prove that it can impose its will on a component unit?

  g.    What is meant by the blending of a component unit?