In what situation may complete consolidation of transfers be impossible?

Complete consolidation of transfers may be impossible in situations where one transfer involves a blend with another unit. Blending occurs when the financial activities of a separate legal entity are integrated into the primary government's financial statements. This typically happens when the separate entity is dependent on the primary government and does not operate independently.

When a transfer involves blending with another unit, it may complicate how the transactions are recorded, as the financial implications of the blended entity must be considered in conjunction with those of the primary government. This integration can lead to complexities that prevent a straightforward consolidation of transfers, particularly if there are different reporting requirements or if the blended entity alters the nature of the financial activities being consolidated.

In contrast, transfers occurring within the same fiscal year, the involvement of external parties, or the primary government’s decision not to consolidate do not inherently present insurmountable barriers to consolidation. The challenges of blending with another unit stem from the specifics of intergovernmental relationships and how they affect financial representation in the consolidated statements.