Financial Facts

October 18, 2018

State and local government issuers would use a single method to report conduit debt and related obligations under a proposed new rule issue for 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 that is primarily responsible for repaying the debt instrument.

The exposure draft, Conduit Debt Obligations, proposes to address variations that diminish the comparability of financial statements.  The proposal includes:
Clarifying the characteristics that define conduit debt.

Requiring issuers to recognize liabilities with commitments they have extended and requiring recognition assets and deferred flows of resources related to certain arrangements associated with conduit debt.

Clarifying accounting and reporting guidance for additional commitments extended for government issuers.
Revising disclosure requirements to provide financial statement users with better information.

VACo Contact: Vicky Steinruck, CPA

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