Special purpose local governments may be stand alone local government or it may be part as a component unit of a general purpose local government.It is important to determine the type of special purpose entity to identify what financial statements must be issued for a special purpose entity that for one reason or another is issuing its own (seprate) financial report that's why GASB 24 tests for component units are intended to determine whether to include a related entity in the financial report of a general purpose government.

Special purpose local government can be separate local government or may be constituent part of general purpose government whereas governmental component unit is a legally a separate organization for which officials of primary government is financially accountable.