Financial Facts

August 24, 2018

State and local government issuers would use a single method to report conduit debt obligations and related obligations under a proposal the GASB published recently. GASB is proposing revisions after reviewing the existing rules under Interpretation No. 2, Disclosure of Conduit Debt Obligations.

Conduit debt obligations are debt instruments issued by a state or local government to provide funding for a specific third party who is primarily liable for repaying the debt instrument such as hospitals and universities. The exposure draft, Conduit Debt Obligations, proposes:

• Clarifying the characteristics that define a conduit debt obligation.

• Requiring issuers to recognize liabilities associated with additional commitments they have extended and requiring issuers to recognize assets and deferred inflows of resources related to certain arrangements associated with such obligations.

• Clarifying accounting and financial reporting guidance for additional commitments extended by government issuers.

• Revising disclosure requirements to provide better information to financial statement users.

VACo Contact: Vicky Steinruck, CPA

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