2011 - Division of Administration - Louisiana

State of LouisianaNOTES TO THE BASIC FINANCIALSTATEMENTSJune 30, 2011NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESThe accompanying basic financial statements of the Stateof Louisiana (State) have been prepared in conformity withgenerally accepted accounting principles as prescribed bythe Governmental Accounting Standards Board (GASB).The basic financial statements present the financialposition and results of operations of the various funds ofthe State and the cash flows of the proprietary funds as ofand for the year ended June 30, 2011.A. REPORTING ENTITYThe State reporting entity consists of the variousdepartments, agencies, activities, and organizational unitsthat are within the control and authority of the LouisianaLegislature and/or constitutional officers of the State. TheState, like that of the United States, has three branches ofgovernment – legislative (bicameral), executive, andjudicial.As required by GASB Statement No. 14, The FinancialReporting Entity, as amended by GASB Statement No. 39,Determining Whether Certain Organizations areComponent Units, a legally separate entity is considered acomponent unit of the State if at least one of the followingcriteria is met:• The State appoints a voting majority of theorganization’s governing body and is either able toimpose its will on the organization or there is apotential financial benefit/burden to the State.• The entity is fiscally dependent on the State.• The nature and significance of the relationshipbetween the State and the entity is such that exclusionwould cause the financial statements of the State to bemisleading or incomplete.Depending upon the closeness of their relationship withthe State, some component units are blended with theState reporting entity, while others are discretely reported.The following component units were evaluated to identifythose entities whose financial activities should be blendedwith the primary government, discretely reported, ordisclosed in the Notes to the Basic Financial Statementsas a related organization, a joint venture, or a jointlygoverned organization:Blended Component UnitsA component unit is considered blended and thereforewould be included in the reporting entity’s financialstatements if the component unit’s governing body issubstantively the same as the governing body of theprimary government, or if the component unit providesservices exclusively, or almost exclusively, to the primarygovernment or otherwise exclusively, or almostexclusively, benefits the primary government even thoughit does not provide services directly to it. The followingblended component units provide services almostexclusively to the primary government: TobaccoSettlement Financing Corporation, Louisiana CorrectionalFacilities Corporation, Louisiana Office BuildingCorporation, Office Facilities Corporation, LouisianaCoastal Protection and Restoration Financing Corporation,Louisiana Transportation Authority, and the variousretirement systems.Tobacco Settlement Financing Corporation, P.O. Box44154, Baton Rouge, LA 70804-4154, a special purpose,public corporate entity, is responsible for financing,purchasing, and managing 60% of the tobacco assets andrelated incidental activities for the State of Louisiana. Theboard of directors consists of thirteen members, sevenappointed by the Governor.Louisiana Correctional Facilities Corporation, P.O. Box94095, Baton Rouge, LA 70804-9095, a nonprofitcorporation, acquires and finances correctional facilities forlease to the State and is authorized to issue revenuebonds for its purposes. The board of directors consists offive members appointed by the Governor.Louisiana Office Building Corporation, P.O. Box 94095,Baton Rouge, LA 70804-9095, a nonprofit quasi-publiccorporation, was created to construct, acquire and leasebuildings and facilities on behalf of and for the benefit ofthe State and may finance such acquisitions by issuingrevenue bonds. The board of directors consists of adesignee of the Governor, the Commissioner ofAdministration, and the director of the Office of FacilityPlanning and Control.Office Facilities Corporation, P.O. Box 94095, BatonRouge, LA 70804-9095, a nonprofit corporation, financesthe acquisition or construction of public facilities for leaseto the State through the issuance of revenue bonds. Theboard of directors consists of five members appointed bythe Governor.Louisiana Transportation Authority, P.O. Box 94245, BatonRouge, LA 70804, a nonprofit corporation established in2001 to promote, plan, finance, construct, operate, andmaintain specific tollways or transitways constructed withinLouisiana. The board of directors consists of ninemembers, including the Governor, the Department ofTransportation and the Department of EconomicDevelopment secretaries, President of the Senate andSpeaker of the House of Representatives.Louisiana School Employees’ Retirement System, P.O.Box 44516, Baton Rouge, LA 70804-4516, wasestablished in 1947 for the benefit of non-instructionalpersonnel of the Louisiana public school system.- 45 -