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Governmental Accounting Standards Board Requiring Additional Disclosures Effective June 15, 2018
By Dustin S. Cammack and Shelby M. Exposito

April 12, 2018 - The Governmental Accounting Standards Board ("GASB") recently issued a statement that requires disclosures of information not previously required. Statement No. 88 ("GASB 88") says that governmental entities must make certain disclosures relating to debt, including direct borrowings and direct placements.

These requirements are effective for reporting periods beginning after June 15, 2018, but GASB encourages voluntary compliance.

Specifically, GASB 88 states that governments must disclose direct borrowings and direct placements separately from other debt. It also requires disclosure of the following information not previously required in notes to financial statements:
  • a. Amount of unused lines of credit
  • b. Assets pledged as collateral for debt
  • c. Terms specified in debt agreements related to significant:
    • 1) Events of default with finance-related consequences,
    • 2) Termination events with finance-related consequences, and
    • 3) Subjective acceleration clauses.
GASB issued GASB 88 in response to requests from stakeholders concerned about then-existing reporting requirements. The Securities and Exchange Commission (the "SEC") has also explored amending SEC Rule 15c2-12 to require similar public disclosures.

It is too soon to tell whether the SEC will conclude that GASB 88 sufficiently addresses stakeholder concerns or see it as an opportunity to issue related regulations, and we do not recommend making additional voluntary disclosures based on these potential amendments to Rule 15c2-12.

To ensure compliance with GASB 88, government finance officers should begin making necessary adjustments to internal procedures and forms used to collect information for reporting purposes and consult with their financial advisor and legal counsel to determine which agreements will be subject to GASB 88's reporting requirements.

For more information, or if you have questions, please contact one of Gust Rosenfeld's Public Finance attorneys:
James T. Giel | 602.257.7495 | jgiel@gustlaw.com
Fred H. Rosenfeld| 602.257.7413 | rosenfeld@gustlaw.com
Zach Sakas | 602.257.7439 | zsakas@gustlaw.com
Timothy A. Stratton | 602.257.7465 | tstratton@gustlaw.com
Dustin S. Cammack | 602.257.7977 | dcammack@gustlaw.com
Shelby M. Exposito |602.257.7498 | smexposito@gustlaw.com

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