Article
GASB issues guidance requiring governments to disclose certain risks
Feb. 4, 2024
The Governmental Accounting Standards Board (GASB) issued Statement No. 102, Certain Risk Disclosures.
Statement 102 requires all state and local governments to disclose essential information about risks related to vulnerabilities due to certain concentrations or constraints.
Key provisions
State and local governments may be vulnerable to a variety of risks. Existing authoritative guidance requires a government to disclose information about its exposure to some risks, such as interest and credit risk associated with investments.
However, governments don’t routinely disclose information about other risks that could negatively affect their ability to meet obligations or the level of service they provide, as it isn’t explicitly required.
The new requirements in Statement 102 are intended to improve financial reporting by providing financial statement users with timely information regarding certain concentrations or constraints that make a government vulnerable to a heightened possibility of loss or harm.
Certain concentrations or constraints
Both concentrations and constraints may limit a government’s ability to acquire resources or control spending.
Concentrations
The identification of a concentration is a matter of professional judgment and is based on both qualitative and quantitative factors. Statement 102 defines a concentration as a lack of diversity related to an aspect of a significant inflow or outflow of resources.
Concentrations can include, but aren’t limited to:
- Employers
- Industries
- Inflows of resources
- Workforce covered by collective bargaining agreements
- Providers of financial resources
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.