Issue:
Which activities will require segment disclosure in the notes to the financial statement?

Reference:
GASB Statement 34, ¶ 122-123. "Governments that report enterprise funds or that use enterprise fund accounting and reporting standards to report their activities are required to present segment information for those activities in the notes to the financial statements."

GASB Statement 37, ¶ 17, amending ¶ 122 of GASB 34. "For purposes of this disclosure, a segment is an identifiable activity (or grouping of activities), as discussed in paragraph 39b, footnote c, reported as or within an enterprise fund or an other stand-alone entity that has one or more bonds or other debt instruments (such as certificates of participation) outstanding,48 with a revenue stream pledged in support of that debt. In addition, the activity's revenues, expenses, gains and losses, assets, and liabilities are required g to be accounted for separately. Disclosure requirements for each segment should be met by identifying the types of goods and services provided and by presenting condensed financial information in the notes, including the elements a through c below."
_____________________________
48 Segment disclosures are not required for an activity whose only outstanding debt is conduit debt for which the government has no obligation beyond the resources provided by related leases or loans. In addition, segment reporting is not required when an individual fund both is a segment and is reported as a major fund.

The requirement for separate accounting should be imposed by an external party. For example, accounting and reporting requirements commonly are set forth in bond indentures.

Implementation Guide: GASB Statement 34

Question 235: In this question, a single enterprise fund is used to account for water and sewer operations, but separate accounts are used to account for each activity. There are outstanding revenue bonds to the water activity, but the sewer operation has no long-term debt. Segment reporting is required for the water operation, but not for the sewer operation. "The primary motive in requiring the segment disclosures was to ensure the availability of information about activities financed by revenue-backed debt, even if the activity was not reported in a separate fund." The segment disclosure is not required for the sewer operation because of the absence of revenue-backed debt.

Question 236: "A public university has fifteen residence halls on its campus, ten of which have individual bonded debt secured by the room fee revenues of the specific dorm. Is the "identifiable activity" the entire group of fifteen residence halls, or only those with revenue bonds outstanding?" Segment disclosure should be made for each of the ten residence halls that meet all the criteria in ¶ 122. "The primary purpose of the disclosure required by paragraph 122 is to provide information about "coverage" of pledged revenues, not to disaggregate all of the operating results of enterprise funds."

Question 237: To meet the requirement for segment reporting, debt need not be backed solely by pledged revenues. "The additional 'full faith and credit' support does not negate the requirement to make the segment disclosures if all the criteria in paragraph 122 are met."

Evaluation:
The requirement to disclose segment information in the notes to the financial statements depends in part on whether the information is already presented in the basic financial statements. Therefore, segment reporting is not required for major funds that are also segments. However, segment reporting is required for multiple segments within a major enterprise fund and for the nonmajor enterprise funds.

Position:

Segment reporting will not be required for the following major enterprise funds that are also segments:

• Transit Agency
• Water and Sewer
• Public Health Trust
• Solid Waste
• Seaport
• Stormwater Utility (to be re-evaluated if criteria for major fund is met)

Although separate identifiable activities within each department, the water and sewer activities and the solid waste collection and disposal activities are jointly pledged as security for the Water and Sewer and Solid Waste Revenue Bonds, respectively. Therefore, these activities are not segments for purposes of this disclosure.

The following enterprise fund activities qualify for segment information disclosure in the notes to the financial statements:

• Aviation Department (two segments)
• Rickenbacker Causeway
• Vizcaya Art Museum
• Housing Agency Public Housing Division (six segments)

The Aviation Department has two segments: the Port Authority Properties and the Aviation Facilities. Each of these activities has bonds outstanding and a revenue stream pledged towards repayment of that debt.

The Housing Agency separately accounts for two enterprise activities: the Section 8 Housing Programs and Mixed Income Housing. The Section 8 Housing Programs activity has six separate revenue bonds outstanding payable from six separate revenue streams. Each of these revenue streams individually qualifies as a segment (see above Implementation Guide, Q. 236). The Mixed Income Housing has no revenue-backed debt and does not qualify for segment reporting (see above Implementation Guide, Q. 235).


Finance Department Approval Date Auditor Sign-off Date