On Wednesday, the Governmental Accounting Standards Board (“GASB”) released an exposure draft that proposes guidance to improve debt-related disclosures in financial statements. Issued as Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, the Exposure Draft offers guidance that would state which liabilities governments must disclose in their financial statements. Such liabilities include direct borrowings and direct placements.
The proposed guidance would describe debt for disclosure purposes as a liability arising from a contractual requirement to pay cash or other assets to resolve a fixed amount at the date of the established contractual obligation. Leases and trade accounts payable would receive exemption from the guidance.
In addition, the new guidance would require additional debt-related information to be disclosed, such as unused credit line amounts, subjective acceleration clauses, and collateral pledged as debt security.
Comments on the proposal can be submitted through Friday, September 15.