Accounting and financial reporting standards for state and local governments that address nonexchange transactions achieved their purpose, according to a new report.

The Financial Accounting Foundation released a post-implementation review (PIR) report Tuesday on the two standards: Governmental Accounting Standards Board’s Statements No. 33, Accounting and Financial Reporting for Nonexchange Transactions, which dates back to 1998, and No. 36, Recipient Reporting for Certain Shared Nonexchange Revenues, which was issued in 2000.

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 guides the accounting for nonexchange transactions involving financial or capital resources. GASB Statement 36 amends 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 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:

  o 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

  o 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:

  o Identify various nonexchange revenue sources,

  o Determine whether there have been significant fluctuations in amounts over time, and

  o 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 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. The team next plans to undertake a post-implementation review of GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations.

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