How are jointly governed organizations reported in the financial statements of participating governments?

In the context of financial reporting for jointly governed organizations, these entities are typically reported as disclosed entities in the notes to the financial statements of the participating governments. This approach allows the governments to provide information about the jointly governed organizations’ operations and financial condition without fully consolidating them into their own financial statements.

This reporting method reflects the nature of jointly governed organizations, which are often created through agreements among multiple governments to jointly provide services or fulfill specific functions. They do not have the same level of control or dependency that would necessitate either discrete presentation or blending of the component unit within the financial statements of a participating government. Including them only in the notes honors the partnership aspect of such organizations while also providing transparency to stakeholders about these arrangements.

In contrast, discretely presented and blended component units are typically reserved for entities that are entirely controlled or substantially dependent on the government, which does not align with how jointly governed organizations operate. Thus, the choice of reporting them as a disclosed entity is appropriate and aligns with established accounting principles and standards.