The following descriptions, modified for teaching purposes, appear in the note disclosures of the City of St. Louis, Missouri, financial statements for the year ended June 30, 20X5:
• The St. Louis Municipal Finance Corporation is governed by a five-member board, consisting of persons in designated city positions. The corporation’s sole purpose is to provide services to finance, acquire, lease, or sublease capital property for the city. It is a separate legal entity.
• The St. Louis Development Corporation is a legally separate entity with a governing body appointed by the St. Louis City Council. Although the corporation exists to oversee development in blighted areas of the city, it may not issue debt or implement a budget for any development activities without the approval of the St. Louis City Council.
• The City Council appoints the voting majority of the St. Louis Housing Authority. The Housing Authority is legally separate, but the city does not impose its will nor is it deemed to have an ongoing financial benefit or burden relationship with the Authority.
• The St. Louis Public Library has the voting majority of its board members appointed by the St. Louis City Council. The library is considered to be a legally separate entity, and the city has no ongoing accountability for its operations.
• The St. Louis Regional Convention and Sports Complex Authority was created as a separate legal entity by the Missouri State Legislature in 199X. The Authority is governed by an 11-member board—the city appoints three members, the governing board of St. Louis County appoints three members, and the Governor of the State of Missouri appoints the remaining five members. The city, the county, and the state have each contractually agreed to provide financial assistance to the Authority for ongoing maintenance needs in equal amounts.
• The Harry S. Truman Restorative Center is a 220-bed skilled nursing facility operated as a not-for-profit separate legal entity supported by the city and located in a city-owned building. The city appoints a voting majority of the Center’s board and the city’s approval is required each year for the Center to finalize its budget.
• The Public Facilities Protection Corporation is governed by a five-member board of designated city positions. The Corporation, a separate legal entity, provides self-insurance for the city exclusively for claims, judgments, and other related legal matters including worker’s compensation.

1. For each entity described, identify which of the following reporting entity classifications appears to be the most appropriate and explain why. Is there additional information that would be helpful? If so, specify the information.
a. Blended component unit.
b. Discretely presented component unit.
c. Joint venture.
d. Related organization.
e. None of the above.
2. Briefly describe how each of these classifications affects the government-wide financial statements, the fund financial statements, and the note disclosures for the City of St. Louis.

  • CreatedOctober 25, 2014
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