Definition of Government Business Enterprise

Government Business Enterprises (GBEs) as defined in the Public Sector Accounting Handbook:

A government business enterprise is an organization that has all of the following characteristics:

1. it is a separate legal entity with the power to contract in its own name and that can sue and be sued;
2. it has been delegated the financial and operational authority to carry on a business;
3. it sells goods and services to individuals and organizations outside of the government reporting entity as its principal activity; and
4. it can, in the normal course of its operations, maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity.

Selling goods and services involves a direct exchange relationship between the revenues and the goods and services provided. Selling prices are related to the quantity and quality of goods or services sold, and not just to the recovery of administrative costs. Imposed fees and penalties, such as licenses and fines, do not represent sales of goods and services. Insurance premiums charged by a government organization are a sale of a service and not an imposed fee.

A government business enterprise should, in the normal course of its operations, be able to maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity. These revenues include not only amounts from the sale of goods and services, but also transfers received from other governments or sources outside of the government reporting entity.

When determining if an organization can maintain its operations and meet its liabilities with revenues received from outside of the government reporting entity, the following factors should be considered:

1. the organization's history of maintaining its operations and meeting its liabilities; 
2. whether the organization would continue to maintain its operations and meet its liabilities without relying on sales to, or subsidies in cash or kind from, the government reporting entity; 
3. past, present and future economic conditions within which the organization operates; and 
4. whether the organization has realistic and specific plans that show how it expects to be able to maintain its operations and meet its liabilities in the future.