According to GASB 70, paragraphs 14–18, agencies that extend non-exchange financial guarantees and agencies that issue guaranteed obligations must follow the note disclosure requirements presented below.

Agencies that Extend Non-Exchange Financial Guarantees

According to GASB 70, paragraph 14, regardless of the likelihood of payment being required, agencies that extend non-exchange financial guarantees must disclose the:

• Description of the guarantee(s) identifying the:
  • Legal authority and limits for extending the guarantees
  • Types of obligations guaranteed
  • Relationship of the agency to the issuer(s) of guaranteed obligation
  • Length of time of the guarantee
  • Arrangements for recovery payments from the issuer(s) of the guaranteed obligation
• Total outstanding guaranteed amount at the reporting date

According to GASB 70, paragraph 15, agencies that recognize the liability or that made payments during the reporting period on the non-exchange financial guarantees must disclose the:

• Description of the timing of recognition and measurement of the liability and changes in recognized liability (in a table format) including the:
  • Liability balance at the beginning of the reporting period
  • Increases of the liability (including initial recognition and adjustments increasing estimates) during the reporting period
  • Guarantee payments made during the reporting period and adjustments decreasing estimates
  • Liability balance at the end of the reporting period
• Cumulative indemnification payments made during the reporting period
• Amounts expected to be recovered from the payments made during the reporting period

Agencies that Extend Financial Guarantees Associated with Conduit Debt Obligations

A conduit debt obligation is defined as a debt instrument having all of the following characteristics:

• There are at least three parties involved:
  • The issuer
  • The third-party obligor
    –AND–
  • The debt holder or debt trustee
• The issuer and the third-party obligor are not within the same financial reporting agency
• The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer
• The third-party obligor or its agent ultimately receives the proceeds from the debt issuance, not the issuer
  –AND–
• The third-party obligor is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments), not the issuer.

According to GASB 91, paragraphs 24-26, note disclosure requirements for agencies that extend a financial guarantee associated with a conduit debt obligation must include a general description of the issuer’s:

• Conduit debt obligation(s)
• Limited commitment(s)
• Voluntary commitment(s)
• Additional commitment(s), including:
  • The legal authority and limits for extending the commitment(s)
  • The length of time of the commitment(s)
  • Arrangements, if any, for recovering payments from the third-party obligor(s)
  –AND–
• Aggregate outstanding principal amount of all conduit debt obligations that share the same type of commitment(s) at the end of the reporting period

Agencies that Issue Guaranteed Obligations

According to GASB 70, paragraph 16, agencies that have outstanding obligations guaranteed by another party must disclose the:

• Name of the party providing the guarantee
• Amount of the guarantee
• Length of time of the guarantee
• Amount paid during the reporting period by the party (guarantor) extending the guarantee
• Cumulative amount paid by the guarantor extending the guarantee
• Description of requirements to repay the guarantor
• Outstanding amounts required to be repaid to the guarantor

According to GASB 70, paragraph 17, if the guarantor made payments for the agency issuing the guaranteed obligation(s) and no obligation is outstanding at the end of the reporting period, the agency issuing the obligation must discloses the:

• Amount paid by the guarantor during the reporting period
• Cumulative amount paid by the guarantor
• Description of requirements to repay the guarantor
• Outstanding amount (if any) required to be paid to the guarantor

GASB 99, paragraphs 5–7, establishes accounting and financial reporting requirements for exchange and exchange-like financial guarantees. Agencies that extended an exchange or exchange-like financial guarantee will apply the provisions in GASB 70, paragraphs 14–15.

Agencies that extended a financial guarantee must disclose the following information (by type of guarantee) for all financial guarantees, regardless of the likelihood of a payment being required.

• A description of the financial guarantee, identifying the:
  • Legal authority and limits for extending the guarantees and types of obligations guaranteed
  • Relationship of the agencies to the issuer(s) of the obligations that are guaranteed
  • Length of time of the guarantees
  • Arrangements for recovering payments from the issuer(s) of the obligations that are guaranteed
• The total amount of all guarantees extended that are outstanding as of the reporting date.

Agencies that recognizes a financial guarantee liability or made payments during the reporting period on financial guarantees extended must disclose the following information:

• A brief description of the timing of recognition and measurement of the liabilities and information about the changes in recognized guarantee liabilities, including the following:
  • Beginning-of-period balances
  • Increases, including initial recognition and adjustments increasing estimates
  • Guarantee payments made and adjustments decreasing estimates
  • End-of-period balances
• Cumulative amounts of indemnification payments that were made on extended guarantees that are outstanding at the reporting date. If the cumulative amount disclosed (as paid by the agency related to a guarantee) does not equal the total amounts actually paid on the guarantee (because the cumulative amount was determined prospectively at transition), the agency must disclose the dates over which the cumulative amount was determined.
• Amounts expected to be recovered from indemnification payments that were made up to the reporting date.