Academic journal article The Journal of Government Financial Management

Improving Revenue and Expense Recognition Information

Academic journal article The Journal of Government Financial Management

Improving Revenue and Expense Recognition Information

Article excerpt

Analyzing a government's revenues and expenses can help the users of financial statements assess whether currentyear revenues are sufficient to pay for the services provided in that year and whether future taxpayers or ratepayers will be required to pay for liabilities related to services previously provided. However, completing this assessment today may be challenging, because the current literature includes limited guidance for what is now referred to as "exchange transactions." An example is fees for services and expenses related to common operating costs.

Furthermore, since the implementation of guidance for nonexchange transactions, certain practice issues have arisen. For example, the current definitions for exchange and nonexchange transactions can lead to an inconsistent application of recognition provisions. These application issues result in similar governments recognizing similar transactions differently, which, in turn, diminishes comparability among governments and the usefulness of information in making decisions.

GASB decided to add a revenue and expense recognition project to its technical agenda in April 2016, after considering research on exchange transactions and a post-implementation review of nonexchange transactions. …

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