GASB Issues Guidance Requiring Governments to Disclose Certain Risks

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.


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
  • Suppliers of material, labor, or services

Examples include a small number of companies that represent a majority of employment in a government’s jurisdiction and a government that relies on one revenue source for most of its revenue.


A government is commonly subject to certain constraints that either are imposed by external parties or are self-imposed. Statement 102 defines a constraint as a limitation imposed on a government by an external party or by formal action of the government’s highest level of decision-making authority.

Constraints on a government’s ability to acquire resources can include, but aren’t limited to:

  • Limitations on raising revenue
  • Limitations on spending
  • Limitations on the incurrence of debt
  • Mandated spending

Examples include a voter-approved property tax cap or a state-imposed debt limit.

Disclosure Criteria

A government is required to identify and assess potential concentration and constraint risks for the primary government reporting unit and all other reporting units that report a liability for revenue debt.

A government is required to disclose information about a concentration or constraint if all the following criteria are met:

  • The concentration or constraint is known to the government prior to issuing the financial statements
  • The concentration or constraint makes the government vulnerable to the risk of a substantial impact
  • An event or events associated with the concentration or constraint that could cause a substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued

Disclosure Requirements

If the above disclosure criteria are met, a government should disclose information in notes to financial statements in sufficient detail to enable users of financial statements to understand the nature of the circumstances disclosed and the government’s vulnerability to the risk of a substantial impact.

The disclosures should include a description of the following:

  • The concentration or constraint
  • Each event associated with the concentration or constraint that could cause a substantial impact if the event has occurred or has begun to occur prior to the issuance of the financial statements
  • Actions taken by the government to mitigate the risk prior to the issuance of the financial statements

If mitigating actions taken by the government prior to the issuance of the financial statements cause any of the above disclosure criteria not to be met, these additional disclosures aren’t required.

Effective Dates

The requirements are effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter.

Early application is encouraged.

We’re Here to Help

For more information about how the amended guidance could affect your organization, contact your Moss Adams professional.

Additional Resources

Contact Us with Questions

Enter security code:
 Security code