GASBS 14 provides additional guidance in applying the financial benefit and burden provisions listed above. The following paragraphs describe this guidance and highlight someconsiderations for the financial statement preparer.

In other cases, organizations’ operations are funded fully or partially by revenues generated through tax increment financing. Legally separate development or redevelopment authorities sometimes receive the incremental taxes resulting from tax increment financing arrangements. In this case, a taxing government temporarily waives its right to receive the incremental taxes from its own levy. The incremental taxes instead are remitted to the separate organization. This type of tax increment financing should be considered evidence of an obligation to provide financial support to an organization(that is, a financial burden).

If the primary government appoints a voting majority of the organization’s governing body and is obligated in some manner for the debt of the organization, the primarygovernment is financially accountable for that organization.

Taken From : Governmental Accounting Made Easy

This entry was posted on Tuesday, May 12th, 2009 at 9:12 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.