Understanding GASB Statement No. 88

July 31, 2018|Susan Pable

Effective for reporting periods beginning after June 15, 2018, government entities need to review how they are disclosing direct borrowing and direct placements of debt.

In April 2018, the Governmental Accounting Standards Board (GASB) issued Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. The statement addresses concerns that direct borrowings (such as a government entering into a loan agreement with a lender) and direct placements (such as a government issuing a debt security directly to an investor) may expose a government to risks that are different from, or additional to, risks related to other types of debt.

For purposes of disclosure in the notes to the financial statements, the statement defines debt as a liability that arises from a contractual obligation to pay cash (or other assets) that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established.

With this pronouncement, you must provide disclosures for direct borrowings of and direct placements of debt separately from other debt. The following additional information should be disclosed in the notes to the financial statements:

  • Unused lines of credit
  • Assets pledged as collateral for the debt
  • Terms specified in debt agreements related to significant events of default with finance-related consequences
  • Significant termination events with finance-related consequences
  • Significant subjective acceleration clauses

The requirements of this statement are effective for reporting periods beginning after June 15, 2018. The GASB encourages earlier application.

For assistance interpreting and implementing the GASB guidance, contact Susan Pable at 920-455-4305 or another member of Schenck’s Government team at 800-236-2246.


Susan Pable, CPA, shareholder, has more than 20 years of experience in governmental accounting and auditing and is a member of Schenck’s Government team. She is responsible for the technical review of audited financial statements of the firm’s governmental clients and the implementation of new accounting pronouncements.