GASB Statement on Debt Disclosures Issued

April 5, 2018

A new Statement by the Governmental Accounting Standards Board (“GASB”) is aimed to improve debt disclosures in financial statement notes, such as those related to direct borrowings and direct placements.

Issued as GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, the standard lists which liabilities governments should document in their disclosures associated with debt. The new guidance requires all debt disclosures should separate direct borrowings and direct placements of debt from other debt types. This requirement is due to direct borrowings and direct placements potentially exposing a government to risks different from or additional to risks associated with other debt types.

For disclosure purposes, GASB Statement No. 88 defines debt as a liability caused by a contractual obligation to pay cash (or other assets that can be used in place of cash) in one or more payments to settle an amount fixed at the date the contractual obligation is recognized.

Additionally, the new Statement requires governments to disclose additional important debt-related information for all debt types. Such information includes the amounts of unused credit lines and any assets pledged as collateral for debt.

Governments must apply GASB Statement No. 88 to reporting periods starting after June 15, 2018. The GASB encourages earlier application of the standard.