POST-IMPLEMENTATION REVIEW CONCLUDES GASB STANDARDS
ON NONEXCHANGE TRANSACTIONS ACHIEVE THEIR PURPOSE
Norwalk, CT—November 17, 2015—Accounting and financial
reporting standards for state and local governments that address
nonexchange transactions achieve their purpose, according to a report
issued today by the Financial Accounting Foundation (FAF). The
Post-Implementation Review (PIR) Report on Governmental Accounting
Standards Board (GASB) Statements No. 33, Accounting and Financial Reporting for Nonexchange Transactions, and No. 36, Recipient Reporting for Certain Shared Nonexchange Revenues, addresses technical, operational, and cost-effectiveness aspects of the two Statements.
Nonexchange transactions are common governmental transactions in which
there is no equal exchange of resources, for example, when a government
collects annual property taxes from local residents.
GASB Statement 33 was issued in 1998 to guide the accounting for
nonexchange transactions involving financial or capital resources. GASB
Statement 36 was issued in 2000 to amend Statement 33 to ensure that
government-shared nonexchange revenues be reported consistently with
voluntary or government-mandated nonexchange transactions.
"The PIR process has provided important stakeholder feedback on the
benefits and costs associated with the requirements of Statements 33 and
36 in light of actual experience in using and preparing the
information," said GASB Chair David A. Vaudt
in the Board's response to the PIR report. "On behalf of the GASB, I
would like to thank the Foundation for undertaking this important
process and all of the individuals and organizations who gave their time
to share their insights and experiences with the PIR staff."
The PIR team received broad-based input from GASB stakeholders including
auditors, preparers, financial statement users, and academics. Based on
its research, the review team concluded that:
- Statements 33 and 36 resolved the issues underlying their stated needs. In particular, they achieved the following objectives:
- Statement 33 provided guidance on the reporting period in
which governments report the results of nonexchange transactions
involving cash and other financial and capital resources, and
- Statement 36 amended Statement 33 to ensure that provider
and recipient governments symmetrically report the sharing of portions
of derived tax or imposed nonexchange revenue transactions.
- Information resulting from the application of Statements 33 and
36 provides creditors and other users of financial statements with
useful information. Information about nonexchange revenues is used to:
- Identify various nonexchange revenue sources,
- Determine whether there have been significant fluctuations in amounts over time, and
- Determine whether the nonexchange revenue sources are subject to restrictions or contingencies.
- Statements 33 and 36 are generally understandable (though
complex), can be applied as intended, and enable information about
nonexchange transactions to be reported reliably. However, some
governments have experienced a level of difficulty applying some of the
provisions of the Statements.
- The changes made to financial and operating practices as a result of Statements 33 and 36 were not significant or unexpected.
- There were no significant unanticipated consequences as a result of the application of Statements 33 and 36.
- Overall, implementation and ongoing application costs associated
with Statements 33 and 36 were not significant and were consistent with
both GASB's and stakeholders' expectations.
- Statements 33 and 36 achieved their expected benefits.
The PIR team's review did not result in any standard-setting process recommendations for the GASB.
The review of Statements 33 and 36 was undertaken by an independent team
of the FAF, the parent organization of the GASB and the Financial
Accounting Standards Board (FASB). The team's formal report is available
here. The GASB's response letter to the report is available here.
With the completion of the review of GASB Statements 33 and 36, the PIR team will initiate its review of GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations.
Stakeholders who would like the opportunity to participate in upcoming PIRs should register online.
For more information on the PIR process, visit the FAF website.