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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Receivables
Recognition of Accounts Receivable and Revenue

The same amounts of receivables are recognized under either the modified or full accrual basis. The difference of the two bases is in the recognition of revenues.

Modified Accrual

Report deferred inflows of resources on the balance sheet for:

  • Revenues earned but not available
  • Intra-entity sales of future revenues (unearned but available) between the primary government and a component unit (GASB 65, paragraph 13)

Report unearned revenue as a liability for derived tax revenues received in advance (unearned but available) (GASB 33, paragraph 16 and GASB 65, paragraph 53).

Full Accrual

In governmental funds, report deferred inflows of resources in the statement of net position for intra-entity sales of future revenues (unearned but available) between the primary government and component unit (GASB 65, paragraph 13).

Report unearned revenues as a liability for derived tax revenues received in advance (unearned but available) (GASB 33, paragraph 16 and GASB 65, paragraph 53)

Report a reconciling item on the GWFS — Reconciliation of the Balance Sheet to the Statement of Net Position for revenues earned but not available. In proprietary funds, report revenues in the statement of revenues, expenses and changes in net position and the statement of activities as soon as they are earned.

In proprietary funds, report deferred inflows of resources in the statement of net position for:

  • Intra-entity sales of future revenues (unearned but available) between the primary government and component unit (GASB 65, paragraph 13)
  • Future revenues in regulated operations (unearned but available) (GASB 65, paragraph 29)

Governmental Funds (GAAP FT01, FT02, FT03, FT04 and FT19)

A governmental fund recognizes revenues (using the modified accrual basis of accounting) in the accounting period the revenues become both measurable and available to finance expenditures of the fiscal period.

Per GASB 65, paragraph 30, when an asset is recorded in a governmental fund but the revenue is not available, deferred inflows of resources are reported in the governmental fund financial statements until such time the revenue becomes available.

The following table illustrates four types of transactions that require different recognition of accounts receivable and revenues under the modified versus full accrual basis for governmental funds. In all four types, transactions are assumed measurable and probable of collection.

Type of A/R Available Earned Modified Accrual (FFS) Full Accrual (GWFS) Asset Recognition
I Yes Yes Revenue Revenue A/R, Cash
II No Yes Deferred Inflows of Resources BS to SNP reconciling item A/R
III Yes No Unearned Revenue
–OR–

Deferred Inflows of Resources if intra-entity sales of future revenues

Unearned Revenue
–OR–

Deferred Inflows of Resources if intra-entity sales of future revenues

A/R, Cash
IV No No Unearned Revenue Unearned Revenue A/R

Proprietary Funds (GAAP FT05 and FT15)

A proprietary fund recognizes revenues using the full accrual basis of accounting. GASB 65, paragraph 30, is not applicable to proprietary funds.

The following table illustrates four types of transactions that require different recognition of accounts receivable and revenues under the full accrual basis for proprietary funds. In all four types, transactions are assumed measurable and probable of collection.

Type of A/R Available Earned Modified Accrual Full Accrual – FFS & GWFS Asset Recognition
I Yes Yes N/A Revenue A/R, Cash
II No Yes N/A Revenue A/R
III Yes No N/A Unearned Revenue
–OR–

Deferred Inflows of Resources if:

  • Intra-entity sales of future revenues
  • Future revenues imposed in regulated business-type activities
A/R, Cash
IV No No N/A Unearned Revenue A/R
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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