Case - GASB Research

Case Discussion

The Atlanta Transit Authority (ATA) was established by the city to construct, operate, and maintain the city's

mass-transit train system. The ATA was created by the city as a separate legal entity, with powers to issue

revenue bonds payable from railway fees and other revenues.

The 9-member governing body of the ATA consists of six members appointed by the mayor for fixed 10-year

terms, and three city officials serving ex officio - the elected city treasurer, the elected city comptroller, and the

appointed superintendent of transportation.

The ATA is financially self-sufficient, and it sets its own rates and approves its own budget. The city cannot

access its assets or surpluses, nor is it obligated to subsidize deficits of the ATA.

The ATA has issued bonds to help fund recent construction and renovation projects. The related bond agreement

states that the debt of the ATA is not an obligation of the city. However, city statutes authorize the city's budget

director to include in the budget submitted to the City Council an amount sufficient to make the principal and

interest payments on the ATA bonds, in the event ATA revenues are insufficient to meet debt service

requirements.

Is the ATA a component unit of the city?

If so, how should the city present the financial activities of the ATA in its Comprehensive Annual Financial

Report (CAFR)? Specifically address both the government-wide and the fund basis financial statement

presentation considerations.

Instructions

Given the facts provided above, provide a summary overview of the case and specifically address the specific

questions. Explain your analysis and document your conclusion fully, including specific references for relevant

technical literature section(s) within the GASB Codification that were utilized in reaching your decisions.

Your case

assignments will be graded on their content and form. From a content standpoint, the paper should identify the

problem(s) and any key issues.

The paper should also present your logic or reasoning leading to your solution to the problem(s), including

specific references to

and

quotations

from the applicable authoritative standards, including Governmental

Accounting Standards Board (GASB) Accounting Standards Codification (ASC), used to make the decision.

When citing references within your case assignment, the technical literature should be referenced utilizing the

codification format

(Example: GASB ASC 2100.102-103).

The "Original Pronouncements" section contains the GASB literature with the "old" pre-codification references (GASB

Statement No. 1, etc.). Since the GASB technical literature has now been codified,

you should use the "Codification"

section when you are citing technical resources in your cases

(similar to what you have done in referencing the FASB

Codification for your financial accounting classes).

For example, if you wanted to provide information for the hierarchy of GAAP, you may want to reference the following

information:

.101

The GAAP hierarchy sets forth what constitutes GAAP for all state and local governmental entities. It establishes the order of

priority of pronouncements and other sources of accounting and financial reporting guidance that a governmental entity should

apply. The sources of authoritative GAAP are categorized in descending order of authority as follows:

a.

Officially established accounting principlesGovernmental Accounting Standards Board (GASB) Statements

(Category A)

1

b.

GASB Technical Bulletins; GASB Implementation Guides;

2

and literature of the AICPA cleared by the GASB

3

(Category B).

Authoritative GAAP is incorporated periodically into this Codification, and when presented in this Codification, it retains its

authoritative status. [GASBS 76, 4]

.102

If the accounting treatment for a transaction or other event is not specified by a pronouncement in Category A, a governmental

entity should consider whether the accounting treatment is specified by a source in Category B. [GASBS 76, 5]

This information can be located at the following path: GARS / Codification / I. General Principles / 1000 - The Hierarchy

of Generally Accepted Accounting Principles. If you were to include this citation as the technical literature in your case

analysis, you would reference it as the Governmental Accounting Standards Board (GASB) Codification 1000.101-102, or

GASB Codification 1000.101-102

.

You will be required to include this reference in your case, and you will be graded upon both

choosing the correct GASB

literature

and

also for proper referencing

of the GASB Codification in your memo.

Also be certain that whatever source you base your case upon and cite in your memo is the

most authoritative

technical

literature (i.e. the GASB Statements) rather than less authoritative documents (i.e. Documents for Public Comment).