Note X – Financial Guarantees

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Note X – Financial Guarantees

A template for this note is not available. See “Instructions to preparer:” for various disclosures that may be required.

Instructions to preparer:

Guarantors

Regardless of the likelihood of a payment being required, a guarantor should disclose the following information, by type of guarantee, for all non-exchange financial guarantees:

1. A description of the non-exchange financial guarantee, identifying:

  • The legal authority and limits for extending the guarantees and types of obligations guaranteed.

  • The relationship of the government to the issuer or issuers of the obligations that are guaranteed.

  • The length of time of the guarantees.

  • Arrangements for recovering payments from the issuer or issuers of the obligations that are guaranteed.

2. The total amount of all guarantees extended that are outstanding at the reporting date.

A guarantor that recognizes a liability or has made payments during the reporting period should disclose the following information:

1. 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 increasing estimates.

  • End of period balances.

2. Cumulative amounts of indemnification payments that have been made on guarantees extended that are outstanding at the reporting date.

3. Amounts expected to be recovered from indemnification payments that have been made through the reporting date.

Original Issuer of the Obligation

A government that has outstanding obligations that have been guaranteed by another entity should disclose the following information for each guarantee:

  • The name of the entity providing the guarantee.

  • The amount of the guarantee.

  • The length of time of the guarantee.

  • The amount paid, if any, by the guarantor during the current reporting period.

  • The cumulative amount paid by the guarantor.

  • A description of requirements to repay the guarantor.

  • The outstanding amounts, if any, required to be repaid to the guarantor.

If a government has issued a guaranteed obligation for which payments have been made by the guarantor and the obligation is no longer outstanding, it should disclose:

  • The amount paid by the guarantor on obligations during the current reporting period.

  • The cumulative amount paid by the guarantor.

  • A description of requirements to repay the guarantor.

  • The outstanding amounts, if any, required to be repaid to the guarantor.

For a detailed discussion of the financial guarantees see BARS Manual 3.4.12, Financial Guarantees and GASB Statement 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees.