GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transaction, was issued roughly 20 years ago, but it is still a relevant topic. Recent delays in subsidy payments and the rental subsidy moratorium have added an extra level of complexity to revenue transactions.
By Matthew S. Wildasin, CPA, principal, Boyer & Ritter CPAs
GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transaction, was issued roughly 20 years ago, so there may be some question as to why this is a relevant current topic. Recent delays in subsidy payments and the rental subsidy moratorium have added an extra level of complexity to revenue transactions. This complexity has begun to raise questions about the proper revenue recognition of these delayed funds. In addition, the GASB is currently pursuing projects related to the financial reporting model, which might affect when revenue is recognized in the financial statements.
In an exchange transaction, each party receives and gives up essentially equal values. Typically, this is the result of a government providing goods or services to the provider in return for resources received. In a nonexchange transaction, the government receives value without giving equal value in return. GASB Codification Section N50 provides the framework for recording nonexchange transactions involving financial and capital resources. The standards divide nonexchange transactions into four categories: derived tax revenue, imposed nonexchange revenues, government mandated nonexchange transactions, and voluntary nonexchange transactions.
When funding is delayed, it becomes even more necessary that the school go through a few steps to ensure that revenues are being recorded appropriately.
Once these items have been defined for the transaction, it becomes easier to appropriately record them. As always, it is important to be consistent from year-to-year, and it is even better to develop and implement a revenue recognition policy that defines the time period used for the availability criterion.
Learn more about revenue recognition and other GASB developments at the Pennsylvania School District Conference on June 1. Attend in King of Prussia or via webcast.
Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.