New GASB standard addresses debt disclosures

By Ken Tysiac

State and local governments will be required to present direct borrowings and direct placements of debt separately from other types of debt in their financial statement note disclosures under a new standard issued Monday by GASB.

GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, clarifies which liabilities governments should include in their note disclosures related to debt. GASB is requiring direct borrowings and direct placements to be presented separately because they may expose a government to risks that are different from, or additional to, risks related to other types of debt.

The new standard also requires the disclosure of additional essential debt-related information for all types of debt, including amounts of unused lines of credit and assets pledged as collateral for debt. Also required to be disclosed are terms specified in debt agreements related to:

  • Significant events of default with finance-related consequences.
  • Significant termination events with finance-related consequences.
  • Significant subjective acceleration clauses.

The requirements take effect for reporting periods beginning after June 15, 2018, and GASB encourages earlier application.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.

SPONSORED REPORT

6 key areas of change for accountants and auditors

New accounting standards on revenue recognition, leases, and credit losses present implementation challenges. This independently-written report identifies the hurdles that accounting professionals face and provides tips for overcoming the challenges.

PODCAST

How tax reform will impact individual taxpayers

Amy Wang, a CPA who is a senior technical manager for tax advocacy at the AICPA, answers to some of the most common questions on how the new tax reform law will impact individual taxpayers.