The GASB issued Statement # 33 to establish accounting reporting standards for non-exchange transactions involving financial or capital resources. This includes most taxes, grants and private donations.

Issue:
Pursuant to GASB 33, effective for fiscal year 2000/2001 and thereafter, should property taxes levied for the ensuing fiscal year be recognized as a current asset?

Reference:

The statement identifies four classes of nonexchange transactions:

1. Derived tax revenues
2. Imposed nonexchange revenues
3. Government-mandated nonexchange transactions, and
4. Voluntary nonexchange transactions.

There is no difference in the timing of recognition of assets, liabilities, and expenses and expenditures, regardless of whether the accrual or modified accrual method of accounting is used. Paragraph 11 states "All standards in this Statement apply whether the accrual basis or the modified accrual basis of accounting is required, except for the revenue recognition standards". However, under the modified accrual method, revenue recognition cannot occur until the revenue recognition criteria established in Statement # 33 for the accrual method of accounting is met and the revenues are available. For purposes of this statement, available is defined as "the government has collected the revenues in the current period or expects to collect them soon enough after the end of the period to use them to pay liabilities of the current period."

GASB# 33 ¶17 states that "Governments should recognize assets from imposed nonexchange revenue transactions in the period when enforceable legal claim to the assets arises or when the resources are received, whichever occurs first. For property (ad valorem) taxes, the date when an enforceable legal claim to taxable property arises generally is specified in the enabling legislation."

Statement# 33 does not change the revenue recognition requirements of NCGA Statement 1---Governmental Accounting and Financial Reporting Principles, as amended, and subsequent NCGA and GASB pronouncements for revenue recognition using the modified accrual basis of accounting, except as indicated in paragraph 6 of this Statement. Therefore, "revenues from nonexchange transactions should be recognized in the accounting period when they become available and measurable." NCGA Interpretation 3 paragraph 8, as amended, states that such time thereafter shall not exceed 60 days.

Florida Statute 197.122--Lien of taxes; dates; application states "All taxes imposed pursuant to the State Constitution and laws of this state shall be a first lien, superior to all other liens, on any property against which the taxes have been assessed and shall continue in full force from January 1 of the year the taxes were levied until discharged by payment or until barred under chapter 95".

Florida Statute 192.042--Date of assessment states "Property shall be assessed according to its just value as follows: Real property, on January 1 of each year. Improvements or portions not substantially completed on January 1 shall have no value placed thereon. "Substantially completed" shall mean that the improvement or some self-sufficient unit within it can be used for the purpose for which it was constructed."

Evaluation:

According to the statement "assets must be recognized when an enforceable legal claim to the assets arises or when the resources are received, whichever occurs first." For property taxes, the date when an enforceable legal claim to taxable property arises generally is specified in the enabling legislation." According to Florida Statute, property taxes are legally enforceable on January 1. The Statement maintains the same revenue recognition requirements for recognizing revenues under the modified accrual method.

Position:

Based on the requirements of the Statement and Florida Statute, Miami-Dade County will be required to recognize a receivable, net of refunds and uncollectible property taxes. Revenue recognition is not required.

Journal entry:

Accounts receivable, property taxes
Deferred revenues-property taxes

To record property taxes for which an enforceable legal claim exists as of September 30.