GFOA Responds to GASB Exposure Draft

Thursday, September 21, 2017

GFOA supports the Governmental Accounting Standards Board (GASB) Exposure Draft (ED), Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, because it brings more transparency to the users of financial statements. GFOA applauds the GASB for providing a definition of debt that will allow preparers can differentiate between debt and other liabilities for financial reporting purposes. In a response letter to the GASB about the ED, GFOA noted that the proposed additional note disclosures create a realistic set of expectations that state and local governments of all sizes can reference and follow. The new disclosures required in the ED, along with the currently required material events disclosures related to market-sold securities that governments must comply with, would be sufficient and reasonable information related to direct borrowings and direct placements for use by regulators, investors, and other users of the financial statements. GFOA also supports the proposed separation of direct borrowings and direct placements from other offerings of debt (i.e., debt sold in the public markets) due to the inherent differences between direct offerings and debt sold in the public markets. The response letter suggested several improvements to the ED, including additional language for the definition of debt and changes to the notes to the financial statements section.