GASB Statement No. 33 "Accounting and Financial Reporting for Nonexchange Transactions"

Issued To: County, City, Town and Village Chief Fiscal Officers

GASB Statement No. 33 provides accounting and reporting guidelines for nonexchange transactions. A nonexchange transaction is one in which a government receives (or gives) value without directly giving (or receiving) equal value in exchange. There is no clear link between services provided and supporting revenues. The statement describes four categories of nonexchange transaction:

  1. Derived tax revenues (for example income tax or sales tax).
  2. Imposed nonexchange revenues (for example real property taxes.
  3. Government-mandated nonexchange transactions (for example federal or state programs which local governments are mandated to perform).
  4. Voluntary nonexchange transactions (for example grants entered into voluntarily).

The purpose of this bulletin is to discuss the Statement No. 33 impact on revenue recognition when using the modified accrual basis of accounting. Modified accrual will be used in preparing your annual financial report to the State Comptroller.

Statement No. 33 changes revenue recognition for expenditure-driven/ reimbursement type grants (Category 3 and 4). Prior to Statement No.33, revenue was recognized when expenditures were made. Statement No. 33 states that to accrue revenue from an expenditure-driven/reimbursement type grant, the expenditure must have been made and the revenue must be available. Available means collectible in the current period or soon enough thereafter to be use to pay liabilities of the current period. The availability period should be consistent with the time frame currently used for revenue recognition. If the revenues are not available to finance expenditures of the current period, the revenue should be deferred.

Statement No. 33 is effective for fiscal years beginning on or after July 1, 2000. Accounting changes made to comply with this statement should be treated as a prior period adjustment. Account code 8015 should be used to reduce beginning fund balance on the Analysis of Changes in Fund Equity Statement in your annual financial report.

If you require additional information or need technical assistance, please contact the regional office serving your government.