United States

New disclosures related to debt


To improve the information related to debt that is disclosed in notes to government financial statements, the Governmental Accounting Standards Board recently issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, which also clarifies which liabilities governments should include in their note disclosures related to debt. For purposes of disclosure in notes to financial statements, the Statement 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. For disclosure purposes, debt does not include leases, except for contracts reported as a financed purchase of the underlying asset, or accounts payable.

The Statement requires that additional essential information related to debt be disclosed in the notes to the financial statements, including:

  • Amount of unused lines of credit
  • Assets pledged as collateral for debt
  • Terms specified in debt agreements related to significant (a) events of default with finance-related consequences, (b) termination events with finance-related consequences and (c) subjective acceleration clauses

Statement No. 88 also requires a government to separate information in debt disclosures regarding (a) direct borrowings and direct placements of debt from (b) other debt. Direct borrowings and direct placements may expose a government to risks that are different from or additional to risks related to other types of debt.

Statement No. 88 is effective for reporting periods beginning after June 15, 2018.