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Component Units

About this Policy

Component Units

Policy Number: 21104

Effective Date:
Dec 12, 2017

Last Updated:

Responsible Office:
UM System Controller's Office

Responsible Administrator:
UM System Controller

Policy Contact:

UM System Controller's Office


  • Finance

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This policy applies to any organization that is potentially classified as a “Component Unit” of the University of Missouri as defined by the Governmental Accounting Standards Board (GASB).  Such organizations are referred to in the policy as “Component Unit affiliate” if the criteria is met for such determination.

Reason for Policy

This policy establishes the University’s process for identifying and tracking entities that qualify as Component Units under GASB accounting standards.

Policy Statement

A legally separate, tax-exempt organization should be reported as a Component Unit affiliate of the University if the University is financially accountable for the organization.  Financial accountability can include the following:

  1. The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the University, its other Component Unit affiliate, or its constituents.
  2. The University or its Component Unit affiliates are entitled to, or has the ability to otherwise access, a majority of the separate organization's economic resources.
  3. The University appoints a majority of the organization’s governing board and
    1.  is able to impose its will on the organization, or
    2. there is potential for the organization to provide specific financial benefits or pose specific burdens on the University.

Direct benefit to the institution occurs if the separate organization holds and invests resources that will benefit the institution. This is not dependent upon actual transfer of resources, but rather that resources are required to ultimately be used for the benefit of the institution, its Component Unit affiliate, or its constituents.

The final determination of the significance of the resources received or held by an individual organization is generally left to professional judgment.

An inventory of all affiliated organizations will be maintained by each campus.  A completed listing must be provided to the UM System Controller’s Office each fiscal year.  The UM System Controller’s Office will determine whether the affiliated organization meets the criteria for inclusion in the University’s reporting entity as a Component Unit.


Component Unit - legally separate organizations for which the University is financially accountable.  In addition, a component unit may include organizations for which the nature and significance of its relationship with the University is such that exclusion from reporting would be misleading. 


UM System Controller’s Office:

  • Maintain a master inventory of all Component Unit affiliates of the University
  • Determine the materiality threshold for including Component Unit affiliates in the University audited financial statements. 
  • If any Component Unit affiliates are deemed material discuss further with the University’s independent auditors and appropriately report the entities in the University’s audited financial statements.

Campus Finance Offices:

  • Maintain a campus inventory of all component unit affiliates with the information listed below
    • Name of legally separate, tax-exempt organization
    • Tax identification number of the separate entity
    • Business purpose of the entity
    • Copy of bylaws of organization
  • On an annual basis provide a copy of the latest audited financial statements of the organization and/or Form 990, if available to the UM System Controller’s Office

Additional Details


Related Information


Policy 11012 on Affiliated 501(c)(3) Organizations


Formerly Accounting Policy Manual 1.03.06 – Component Units (revised 7/1/2003)


Reviewed 2017-12-06