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The criterion that is identified as not part of the Federal Reporting Entity pertains to possessing independent financial authority. The Federal Reporting Entity focuses on recognizing entities that are controlled by the federal government and impact the financial reporting process.

The essential characteristics of entities within this reporting framework include their capability to exercise sovereign power, which refers to the authority to make decisions that affect the governance and operations of the entity. Additionally, the ability to determine outcomes affecting service recipients is relevant, as this illustrates the entity's roles and responsibilities in delivering services to the public.

Being subject to direct administrative control is another key criterion; it ensures that the federal government has oversight and influence over the operations and decisions of the entity. In contrast, independent financial authority implies a level of autonomy that does not align with the characteristics of entities included within the Federal Reporting Entity, as these entities are typically subject to federal control and accountability measures.