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ST . PETERS HUMAN SERVICES , INCORPORATED (A Component Unit of the Indian River County District School Board) Notes to Basic Financial Statements A primary government has the ability to impose its will on an organization if it can significantly influence the programs , projects, or activities of, or the level of services performed or provided by the organization . A financial benefit or burden relationship exists if the primary government (a) is entitled to the organization ' s resources ; (b) is legally obligated or has otherwise assumed the obligation to finance the deficits of, or provide financial support to the organization ; or (c) is obligated in some manner for the debt of the organization . There are no component units of the Academy . (b) Basic Financial Statements — GASB Statement 34 The basic financial statements include both Academy-Wide (based on the Academy as a whole) and fund financial statements . While the previous reporting model emphasized fund types , in the new financial reporting model the focus is on either the Academy as a whole, or major individual funds within the fund financial statements . Both the Academy- Wide and fund financial statements categorize primary activities as either governmental or business type . In the Academy- Wide statement of net assets , governmental and business- type activities are presented separately and are reflected on a full accrual , economic resource basis , which incorporates long-term assets as well as long-term debt. The Academy-Wide statement of activities reflects both the gross and net costs per functional category (instruction, administration, maintenance , etc . ), which are otherwise being supported by general government revenues , such as property taxes and intergovernmental revenues . The statement of activities reduces gross expenses , including depreciation, by related program revenues such as discretionary grants that can be used for either operating or capital purposes . The net cost by function is normally covered by general revenues while the previous financial reporting model did not summarize or present net cost by function or activity . This Academy-Wide focus is more on the sustainability of the Academy as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The fund financial statements are, in substance, very similar to the financial statements presented in the previous financial reporting model . Emphasis here is on the major funds . As of and for the year ended June 30 , 2002 , the Academy considered all of its funds to be major funds . The governmental funds in the fund statements are presented on a current financial resource and modified accrual basis of accounting . This is the manner in which these funds are normally budgeted . This presentation is deemed most appropriate to demonstrate legal compliance and the source and use of liquid resources . Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the Academy-Wide statements , a reconciliation is presented on each of the fund financial statements , which briefly explains the adjustment necessary to transform the fund based financial statements into the total governmental column of the Academy-Wide presentation. (Continued) 17