News Release 09-29-06


GASB Issues Statement to Clarify Guidance on Accounting for Sales and Pledges of Receivables and Future Revenues


Norwalk, CT, September 29, 2006—The Governmental Accounting Standards Board (GASB) has issued Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues. This Statement establishes criteria that governments will use to ascertain whether certain transactions should be regarded as a sale or a collateralized borrowing. Such transactions are likely to comprise the sale of delinquent taxes, certain mortgages, student loans, or future revenues such as those arising from tobacco settlement agreements.

This Statement also includes a provision that stipulates that governments should not revalue assets that are transferred between financial reporting entity components.

Guidance for reporting the effects of such transactions in governmental financial statements have been provided in several standards or, in certain cases, has not been authoritatively addressed. This has resulted in considerable diversity in practice in the manner that such transactions have been reported.

In addition to clarifying guidance on accounting for sales and pledges of receivables and future revenues, the Statement:

  • Requires enhanced disclosures pertaining to future revenues that have been pledged or sold
  • Provides guidance on sales of receivables and future revenues within the same financial reporting entity
  • Provides guidance on recognizing other assets and liabilities arising from the sale of specific receivables or future revenues. 

"Statement 48 is intended to clarify accounting by establishing clear criteria for determining whether proceeds received from a given transaction should be reported as revenue or a liability," said Robert H. Attmore, Chairman of the Governmental Accounting Standards Board. "Moreover, the standard’s enhanced disclosure requirements will improve the usefulness of financial reporting by enabling the public to become better informed about the status of future revenues that may have been pledged or sold."

According to Chairman Attmore, GASB’s open deliberations in this project benefited from the thoughtful comments and suggestions of individuals and constituent organizations in response to the Exposure Draft of the proposed standards.

In response to that feedback, the final standard contains several modifications from the Exposure Draft, including the following:

  • Statement 48 supersedes guidance regarding future revenue sales provided in Technical Bulletin 2004-1, Tobacco Settlement Recognition and Financial eporting Entity Issues. However, in response to concerns expressed by several respondents to the 2005 exposure draft, the Statement transition provisions were modified to allow for prospective, rather than retroactive, application of the requirements that pertain to sales of future revenues.
  • The criteria for distinguishing a borrowing transaction from a sale transaction were clarified for both receivables and future revenues.
  • The definition of active involvement was sharpened. Active involvement is a key consideration in determining whether a transaction transferring the right to a future revenue stream could qualify as a sale.
  • The detailed accounting and reporting guidance proposed in the Exposure Draft was expanded and enhanced, especially for governmental funds.
  • The requirements for disclosures about pledged revenues were clarified and an exemption from those disclosure requirements was granted for legally separate entities that report as stand-alone business-type activities whose operations are financed primarily by a single major revenue source. 

The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2006.

Statement 48 (Product Code GS48) can be ordered through the GASB’s order department at 800-748-0659 or via its website at

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website