Question

The relationships between a county and several potential component units are outlined as follows. Harrington County is organized under the county executive form of government, as provided by state law. Under this form of government, the policies concerning the financial and business affairs of the county are determined by the County Board of Supervisors. The Board is composed of eight elected members who serve four-year terms. The Board appoints a county executive who is the government’s chief administrative officer and executes the Board’s policies and programs. All but two of the following component units issue separately audited financial statements. The School Board and Adult Detention Center do not prepare separate financial reports at this time.

Potential Component Unit Description of Activities and Relationship to the County
Mensah City Recreation Center Derives revenue from a special levy on personal property and real estate within the district and user fees. Assists and advises County Board on management and planning of levy district and its recreation center. County appoints majority of board, guarantees debt.
District Home Board Agreement between five jurisdictions. Establishes policy for operation of two district homes. Each county appoints a board member. No other formal relationships or responsibilities.
Northern Region Health Center County Board resolution created a commission for the
Commission operation of a nursing home pursuant to state code. Develops and establishes policies for the operation of a nursing home. Appoints two of the five commission board members. Another cooperating county appoints two other board members. The governor appoints the fifth member.
Maysami Regional Special Agreement between three school districts to foster coop-
Education Program eration in the development and delivery of special education programs and other appropriate educational services. Each district appoints one-third of the program’s board and subsidizes one-third of any operating deficiency.
Adult Detention Center (ADC) Establishes policy for operation of regional adult detention center providing care and confinement for all County and adjoining city prisoners. Majority of Center Board is appointed by County; County hires management officials.
Park Authority Established by County Board resolution. Acquires, develops, maintains, and operates park and recreation areas according to Authority and County Board comprehensive plans. Majority of County Board serves as the board of the authority. Financial benefit/burden relationship exists. Authority provides services to the County.
County Parkway District Exercises the powers and duties enumerated in the state code related to the transportation improvement district. Majority of District Board is appointed by County; financial benefit/burden relationship exists.
Harrington County School Board School Board is selected by popular election but has no taxing authority. Most resources are provided by the county, which has budget approval authority over the school board budget.

a. Determine which of the potential component units the county should report as component units in its financial report. Explain the basis for your decision. If additional information is needed to make this determination for a potential component unit, state what information is needed.
b. For each component unit, indicate whether it should be blended or discretely reported. Explain. If additional information is needed to make this determination for a potential component unit, state what information is needed.
c. For each component unit, indicate whether more detail must be presented in the county’s CAFR than the information in the combining component unit financial statements.



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  • CreatedOctober 25, 2014
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