New GASB Debt Disclosure Requirements Begin June 15!

/New GASB Debt Disclosure Requirements Begin June 15!

State and local governments will now be required to include in their financial statement notes additional information regarding debt held, following the issuance of a new standard from the Governmental Accounting Standards Board (GASB).

GASB Statement 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, was issued this week and is designed to improve the consistency of debt-related disclosure notes and provide a clearer financial picture of the governmental entity. It mandates that the reporting government should separate information regarding direct borrowings and placements of debt from other debt. It also requires that the following information regarding debt be included in financial statement notes:

  • Unused lines of credit
  • Assets pledged as collateral for the debt
  • Terms of debt agreements that address significant events of default, termination and subjective acceleration clauses

The GASB debt disclosure standard defines debt as “a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established.” Debt in this case does not include leases that don’t result in a purchase (for example, an apartment rental or leased vehicle without an option to buy).

The new GASB debt disclosure standard takes effect for reporting periods beginning after June 15, 2018, with earlier implementation encouraged by GASB.

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2018-07-12T19:57:09+00:00