GASB Statement No. 36 Alters Accounting for Shared Revenues
In April, GASB issued Statement no. 36, Recipient Reporting for Certain Shared Nonexchange Revenues, which alters previous guidance on accounting for certain shared revenues. The new statement amends paragraph 28 of Statement no. 33, Accounting and Financial Reporting for Nonexchange Transactions.
Since GASB issued Statement no. 33 in December 1998, questions have arisen concerning the differences between the provisions of paragraph 28 of Statement no. 33 and the recognition requirements for government-mandated and voluntary nonexchange transactions, examples of which are certain grants and most donations.
The new guidance requires governments that receive shared derived tax revenues (for example, sales and income taxes), or shared imposed nonexchange revenues (for example, property taxes) to account for the sharing either as a voluntary or government-mandated nonexchange transaction, whichever is appropriate. An example of the latter transaction is federal government mandates concerning state and local governments.
Statement no. 36 also changed another aspect of recording shared revenue. Paragraph 28 of Statement no. 33 had said some recipient governments might not be able to obtain or reasonably estimate the accrual information necessary to record a nonexchange transaction and, therefore, should accrue revenue equal to cash received, adjusted for amounts that are attributable to prior periods.
The release of Statement no. 36 removed that requirement, permitting governments now to use any method that provides a reasonable estimate including, but not limited to, cash received.
Statement no. 33 had also required recipients of shared revenues to account for the transaction in a manner different from the provider government’s. Recipient governments were required to record the sharing as if they had imposed the tax (for instance, sales tax), rather than as if they had received a portion of a tax imposed by another government. Thus, in certain situations, the recipient government could have been required to report a receivable and revenue even though the provider government had not recognized a liability and expenditure for the same transaction. For example, a provider government might have collected revenues in one period, and appropriated and remitted them to the recipient government in the subsequent period.
GASB recommends that Statement no. 36 be implemented simultaneously with Statement no. 33, which is mandatory for periods beginning after June 15, 2000. Governments that already have implemented Statement no. 33 should apply the provisions of Statement no. 36 in preparing their next GAAP report.