Identification of Component Units. Following are descriptions of several relationships between primary governments and other organizations.
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Using just the information provided, indicate whether you believe the primary government should include the organization as a component unit.
Please explain your answer.
a. Tesser Municipal Hospital is a not-for-profit corporation, whose governing board is appointed by the Tesser city mayor. The hospital manages its day-to-day operations and sets its own fee schedule. The governing board provides preliminary approval of the hospital budget, with final approval required by the Tesser city council. Bonded debt for the hospital is repaid with the hospital’s revenues.
b. The Atkins Convention and Visitor’s Bureau is a not-for-profit organization funded by a hotel tax levied by the City of Atkins. By city statute, the hotel tax is set by the city and can be used only by the Convention and Visitor’s Bureau.
c. The Sports Authority of Dawson County is a legally separate organization with its own elected board. It annually presents its budget to the Dawson County Commission for commissioners’ input and recommendations. The Sports Authority incorporates those recommendations it deems beneficial.
d. The County Aviation Authority has issued bonds that are guaranteed by the City of Middle Falls. The Aviation Authority will use its revenues to service the debt. Middle Falls believes that the probability it will have to cover any debt service requirements related to the Aviation Authority bonds is remote.
e. Help for Kids is a not-for-profit organization that receives funding from Alice County. Each year Help for Kids is required to submit its audited financial statements and approved budget to Alice County. County com-missioners review the financial statements and budgets to ensure that the resources provided by the county are being used in an approved manner.