As the fiscal year-end approaches, state and local governments should prepare for the implementation of GASB Statement No. 102, Certain Risk Disclosures.

Key Concepts

• Concentration: A lack of diversity in key revenue sources or resources (e.g., one major tax source or supplier).

• Constraint: An externally imposed limit on a government’s ability to spend or raise revenue (e.g., debt limits, rate caps).

Disclosure Criteria

Governments must disclose when:

1. The risk is known prior to issuing the financial statements.

2. The risk creates vulnerability to substantial impact.

3. An event triggering the risk has occurred, begun to occur, or is likely to begin within 12 months.

What to Include in Your Disclosure

• Description of the concentration or constraint.

• Events that could cause substantial impact.

• Actions taken to mitigate risk.

Use Professional Judgment

Determining whether a situation meets disclosure requirements involves both qualitative and quantitative analysis. Start assessments early and seek advisory support where needed.

Looking Ahead

Governments should also prepare for the following standards taking effect in FY 2026:

• GASB Statement No. 103: Financial Reporting Model Improvements

• GASB Statement No. 104: Disclosure of Certain Capital Assets