Is your government about to obtain new debt in their governmental funds? If there is a payment in July following fiscal year end; should the payment be recorded in the current year or next fiscal year? Under cash basis, there should not be an expenditure recorded until amounts are due and payable; however there is an exception to your July debt payment. GASBI No. 6, paragraph 13, provides that governments may report a liability and expenditure for debt service on general long-term debt before it is paid if it meets the following requirements:
1.) Financial resources have been accumulated in a debt service fund and
2.) The debt matures early in the following year which usually means one to thirty days.
It is the government’s discretion whether or not to accrue; but a government should be consistent with their reporting year over year.
Henry & Horne