Update Debt Disclosures in Compliance with GASB-88

Posted on July 9, 2019September 9, 2021

AAFCPAs would like to remind clients and friends that, in April 2018 the Government Accounting Standards Board (GASB) issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. This standard is applicable for entities following governmental accounting standards, including AAFCPAs’ Charter School clients in Massachusetts and New Jersey, as well as other quasi-governmental organizations. The standard is applicable for reporting periods beginning after June 15, 2018 (fiscal years ending June 30, 2019).
The guidance defines debt for financial reporting purposes to clarify which transactions—including direct borrowings—are considered debt (and distinguishes debt from other long-term liabilities). The Statement also features additional disclosure requirements designed to provide information financial statement users need, including:

Amount of unused lines of credit
Assets pledged as collateral for debt
Significant events of default or termination events as specified in the debt agreement and their significant finance-related effect, and
Subjective acceleration clauses.

Additionally, the standard requires the information in debt disclosures for a direct borrowing or direct placement of debt to be separate from all other debt.
AAFCPAs advises clients to review GASB 88 and ensure note disclosures comply with the new requirements.
If you have any questions, please contact: John Buckley, CPA, CGMA at jbuckley@nullaafcpa.com, 774.512.4039; or your AAFCPAs Partner.

About the Author

John Buckley, CPA, CGMA

John is the leader of AAFCPAs’ Educational Services practice, serving diverse academic and education services clients spanning independent schools, colleges/universities, special education schools, education services, charter schools and charter management organizations (CMOs). He fully understand the nuances of the educational services industry and business and operational challenges faced by these institutions, including funding and regulatory issues such as: capital campaign structures, complex endowments, alternative investments, debt financing and tax credit options, and unique governance concerns and …

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