AICPA Groups Comment on GASB’s Exposure Drafts on Debt and Other Postemployment Benefits

October 26, 2017

The American Institute of CPAs (AICPA) provided comments to the Governmental Accounting Standards Board (GASB) on two Exposure Drafts (ED) during the past month: (1) GASB Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, an Amendment to GASB Statements No. 34 and No. 38 (Debt Disclosures ED), and (2) GASB Proposed Implementation Guide, Implementation Guide No. 20X1-Z, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB (Other Postemployment Benefits) Plan Reporting) (OPEB Implementation Guide ED). The AICPA State and Local Government Expert Panel (SLGEP) and the Private Companies Practice Section (PCPS) Technical Issues Committee (TIC) contributed to these advocacy efforts.

GASB Debt Disclosures ED.  In its September 14, 2017 letter, the SLGEP expressed support for the GASB defining debt for purposes of disclosure.  However, the SLGEP raised several concerns relating to certain aspects of the definition that need clarification to promote consistent application. Among the other comments presented, the SLGEP also suggested the Board eliminate the proposed requirement to distinguish direct borrowings and direct placements from other debt as it is not necessary.  

In its September 15, 2017 letter, TIC raised concerns about the proposed disclosures regarding “significant” events of default, termination or subjective acceleration provisions. TIC requested that additional guidance be added as to the determination of “significant,” particularly with regard to events of default as to prevent diversity in practice with the application of these provisions.

GASB OPEB Implementation Guide ED.  In its September 26, 2017 letter, the SLGEP expressed continued concerns on two topics which it had previously commented on in GASB pension proposals.  First, relating to the notion of a partition of a trust, the SLGEP suggested the Board perform research and outreach, including analysis of trust documents that are believed to meet the criteria for being “legally restricted,” for the purpose of providing additional clarity.  Second, as it relates to the discount rate, the SLGEP recommended that GASB add illustrations with a nearer crossover point to provide more realistic guidance for common scenarios. 

TIC raised several questions and asked for clarification on several proposed questions and answers in its September 27, 2017 letter