Maybe you would learn something if I wasn't blocked! !!!! Don, the problem is the Governmental accounting standards give a silly and contorted view of certain financial positions. Which is why so many governmental agencies are a ticking time bomb financially.
OK, well that is a little different then though. That means you don't blame the HSA -- they are doing exactly what they are supposed to do. You blame GASB for poor standards. Fair enough.
I actually recant and now do blame HSA. A quick review of GASB standards show a balance sheet requirement. HSA does not appear to be following any commonly accepted reporting standard. Who knows...it is misleading to report it as revenue....hides bigger cash flow issues...and I can't even reconcile why they would do that.
Can you post the link to the SA financial report? I'd like to see it. Again, it would surprise me if they are not GASB compliant since that would qualify their audit. Since they are basically an entity to hold debt, and they will want the ability to refinance their debt, that is a big deal. But I've been surprised before.
Well. Some of it is in a big book in my office. But here is the description of asset reporting. http://www.gasb.org/jsp/GASB/GASBContent_C/UsersArticlePage&cid=1176156736184 You can also go to chapter 25 for a description of capitalization of assets. I cannot find anything justifying their classification as revenue.
The app won't let me select the link from the post on my phone and it is a direct download so I can't capture it easily ....post 214. BBVA compass shown as both asset and revenue.
Yeah, because you might want to learn something - or at least understand why taxpayers don't want to continuously fund government blindly.
Oops, copied the link in the wrong post, try this one: http://emma.msrb.org/EA538529-EA419652-EA816622.pdf
So ... Shoeless linked me to the audited financials of the Houston Harris County Sports Authority for FY 2012. Thanks for that. It is a clean, un-qualified opinion. That means it is 100% compliant with GASB standards. So I'm struggling to figure out the issue. When you are given an asset, it makes perfect sense to count that as revenue, and it then goes onto your books as an asset does. Just like a cash donation. What is wrong about that?
You don't depreciate cash. They were given a fixed asset that somehow shows up on both the income statement and balance sheet and cash flows or "statement of activity" all at the same value. It's not really revenue but they show it in a way that makes it look like revenue in 2012. It's a capital contribution.
I stopped bothering to reconcile my checkbook years ago but............ I think the problem with the HHCSA using the donation of the stadium as an asset and counting it on the balance sheet is this: 1. Unlike other property owned by the HHCSA, Dynamo Stadium was solely paid for by Dynamo Stadium LLC (AEG, Brenner Group, and Oscar). Dynamo Stadium LLC is accountable for the loans which were obtained in financing the stadium and the HHCSA is not accountable. 2. Even though they are booking the donation as an asset, I would bet that they do not actually have 100% control of that asset - in other words they couldn't sell it. Dynamo Stadium LLC actually holds the right to operate the stadium for something like 20-30 years. 3. The $80 something million "donation" skews the books by making it look like HHCSA is in actual better financial shape than it is. I'm pretty sure that the agreement between Dynamo Stadium LLC and the HHCSA does not give HHCSA any right to liquidate or dispose of the property. For some reason Enron, their creation of subsidiaries and transfer of assets to those subsidiaries while accounting for those transfers as sales comes to mind.
Well, the issue is with GASB, not the HHCSA which accounted for it the way they are supposed to. Btw, if I lease my house out under a five-year lease I don't have complete control of the house but it is is still my asset. The lease might even prohibit me from selling it but it is still my asset. If you built the house, took on debt, donated it to me and serviced your debt it is still my asset. The full nature of the situation is clearly disclosed. It is a complex transaction. I don't feel misled one iota. The financial statements are quite clear. Financial statements include notes. You have to read the notes to understand the simple numbers presented in the balance sheet. To read the balance sheet and declare it misleading is like reading 1/2 of a paragraph and declaring the whole thing misleading.
The lease has to do with the land not the improvements on the land. Is the land worth 8o milmore now that a stadium is on it? I don't understand how the HCCSA can clam the stadium as an asset when they don't own the stadium - the bank does until the mortgage is paid right? I guess I need to read more on the specifics of the agreements.
1) no one is arguing its not an asset only that the rest of the world cannot claim an asset as revenue. 2)the notes in no way explain how they can claim it as revenue only that it was a capital contribution. 3) you are not misled because you know the whole story behind the construction of the stadium. Someone with no knowledge sees an extra 80 million in revenue. 4) your rental house is not a great example as you don't report to shareholders or taxpayers. But if you did, the asset and corresponding debt would be on your balance sheet. The only revenue shown would be rental income not asset value. 5) if we tried this, we would be under federal investigation and audit.
Not that you can't tell, but I'm definitely now disagreeing rather than investigating. If I donate cash to you then you now have increased assets and increased revenue. Your statement is just not true. Assets can be revenue. Which is consistent with GAAP and GASB. Exactly how the rest of the world would do it. The financials explain it is a one-time asset donation. Not if the house was donated to me by the renter who then rents for the rental price of the obligation to operate it and maintain it. In that situation the donation would be income and there would be no rental income to report. The asset would be on my balance sheet. It's an unqualified clean audit opinion. Your accusing the Audit firm of corruption?
Yeah trying to figure it out too 1)cash is treated differently. Capital contributions of cash are reported on a balance sheet not an income statement. 2) not quite...because they still have to post the capitalization and depreciation schedule on the balance sheet in GAAP along with liability which kills the contributing revenue on a fully financed asset. Although my assumption through this discussion is the debt is secured by the stadium. I suppose if not it may actually be year one revenue. 3) yes they explain it as donation...not why it is on both balance sheet and income statement. 4) yes...yes...the house would show on your balance sheet. That is what I said....not your income statement. ( although you may want to talk to a tax attorney about whether you have to claim upkeep cost as income). 5) again, never said it was against GABS only that it does not appear consistent with the private sector. As for the audit firm, not infallible in either case ask AA. Maybe the better question is where did the debt and capitalization schedule go?
So....ignoring the rest of our discussion I think I have discovered our differences. FASB issued new guidance in 2013 on the handling of the very issue we are discussing (for gaap) because apparently no one was handling it the same way. Of note though this only applies to not for profits. Assuming GASB follows suit HSA will have to meet criteria for asset classification as non financial which they would be in a gray area for them. Although nothing answers how they can claim the revenue and asset without listing the liability either on the balance sheet or as debt forgiveness (AEG assuming note for stadium no linger secured).