The new conduit debt obligations accounting standard for the public sector, Governmental Accounting Standards Board Statement No. 91, Conduit Debt Obligations (GASB 91), is effective for organizations with fiscal years beginning after Dec. 15, 2021.
GASB 91 changes the financial reporting requirements of organizations that have conduit debt obligations. A conduit debt obligation is a debt instrument issued in the name of a state or local government (the issuer) for the benefit of a third party that is primarily liable for the repayment of the debt instrument (the third-party obligor).
A conduit debt obligation has all of the following characteristics:
*A parity bond is a bond with equal rights to the collateral as other bonds issued under a common bond indenture.
An issuer’s commitments (characterized as limited, additional and voluntary) associated with a conduit debt obligation can vary and impacts the recognition and measurement of the conduit debt obligation and what should be disclosed in the notes to the financial statements.
If your organization has conduit debt obligations that need to be accounted for under GASB 91, it is important to prepare now for implementation.
For more information on GASB 91, or to learn how Baker Tilly's public sector specialists can help, contact our team.