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The Governmental Accounting Standards Board (GASB) has issued an exposure draft, Certain Risk Disclosures, that would require governmental entities to disclose information about risks that could affect services to be provided or obligations that must be fulfilled.

The information about risks concerns current vulnerabilities caused by certain concentrations or constraints. Concentrations are defined as a lack of sufficient diversity related to an aspect of a significant revenue source or expense. Constraints are defined as limitations imposed on a government by an external party or by formal action of the government’s highest level of decision-making authority.

The proposal requires a government, such as a public institution, to assess whether:

  1. An event associated with a concentration or constraint has occurred or is more likely than not to begin to occur within 12 months of the financial statement date or shortly thereafter.
  2. It would be at least reasonably possible that within three years of the financial statement date, there would be a substantial effect on the government’s ability to provide services at the level provided in the current reporting period or meet its obligations as they come due.

When the criteria have been met, a public college or university would be required to disclose the concentration or constraint for each related event and information related to the two criteria above. Risks disclosed in prior periods that no longer meet the criteria are not repeated, and an explanation as to why they aren’t repeated is not required. 

Comments on the exposure draft are due September 30. NACUBO will comment and encourages public institutions to also comment or share feedback for inclusion in NACUBO’s letter.


Sue Menditto

Senior Director, Accounting Policy


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