Accounting
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Governance, Risk Management and Compliance (GRC)
GASB 102 Certain Risk Disclosures: What Governments Must Report About Concentrations and Constraints
Last updated: October 16, 2026 · Independent guide · We do not sell rankings or coverage.
GASB 102 requires state and local governments, school districts and public colleges that follow GAAP to disclose in the notes when a concentration or a constraint exposes them to the risk of a substantial impact and a related event has occurred, has begun or is more likely than not to begin within 12 months of the date the financial statements are issued. The standard changes no accounting entries. It does require an annual, documented assessment that your auditor will test (GASB Statement No. 102, December 2023).
GASB 102 in brief
- Who it applies to: state and local governments that prepare GAAP financial statements, including school districts, special districts and public colleges and universities.
- Requirement: disclose a concentration or constraint when it is known before issuance, it makes the reporting unit vulnerable to the risk of a substantial impact, and an associated event has occurred, has begun or is more likely than not (above 50 percent) to begin within 12 months of issuance.
- What to disclose: the concentration or constraint, each event that could cause a substantial impact, and mitigating actions taken before issuance.
- Effective date: fiscal years beginning after June 15, 2024, so June 30, 2025 and December 31, 2025 year ends were the first required reports.
- Official source: GASB Statement No. 102, Certain Risk Disclosures. We checked the statement and the state guidance cited below on October 16, 2026.
What GASB 102 requires
The two definitions
Paragraph 5 defines a concentration as “a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources.” GASB lists six examples: employers, industries, inflows of resources, workforce covered by collective bargaining agreements, providers of financial resources, and suppliers of material, labor or services. A city where one manufacturer pays a large share of property taxes has a concentration.
Paragraph 6 defines a constraint as a limitation imposed by an external party or by formal action of the government’s highest level of decision-making authority. The four listed examples are limits on raising revenue, limits on spending, limits on incurring debt, and mandated spending (GASB 102, paragraphs 5 and 6). Voter-approved tax caps, state debt limits and debt covenants all qualify (NC State Treasurer, Memorandum 2026-03, August 26, 2025).
The three-part disclosure test
Paragraph 7 requires a note only when all three criteria are met. If an action taken before issuance causes any one criterion to fail, no disclosure is required (Ohio Auditor of State, GASB 102 FAQs, updated January 2, 2026).
| Criterion | The question to answer | Evidence to keep |
|---|---|---|
| (a) Known | Did the government know about it before the statements were issued? | Revenue share analysis, statute citations, board minutes |
| (b) Vulnerable | Does it expose the reporting unit to the risk of a substantial impact, beyond its mere existence? | Percent of revenue at stake, headroom under a limit |
| (c) Event timing | Has an associated event occurred or begun, or is it more than 50 percent likely to begin within 12 months of issuance? | Dated notices, announcements, legislation, probability reasoning |
GASB does not put a number on “substantial.” The Basis for Conclusions says the term impact “broadly conveys a financially disruptive effect on the normal functioning of a government” (paragraph B21). The Ohio Auditor of State treats substantial as a higher bar than significant, judged on quantitative and qualitative factors. Footnote 3 defines more likely than not as a likelihood of more than 50 percent.
Which reporting units you assess
You assess the criteria for the primary government reporting unit, which includes blended component units, and for every other reporting unit that reports a liability for revenue debt (GASB 102, paragraph 7). In practice this means a separate look at each water, sewer, electric or airport fund with revenue bonds. A customer that is minor for the city as a whole can be decisive for a utility fund whose bonds are repaid only from its own charges.
What the note must say
Paragraph 9 requires the concentration or constraint, each associated event that could cause a substantial impact, and the actions taken before issuance to mitigate the risk. Plans not yet carried out are not mitigating actions. In GASB’s airport illustration, the city’s plan to attract new airline customers is left out of the note because nothing had happened by the issuance date (Appendix C, Illustration 1). Paragraph 8 says to combine the disclosures with related notes, such as the property tax or long-term debt note, to avoid duplication.
Who is exempt and what is out of scope
There is no size exemption, so every GAAP-basis government performs the assessment each year, even when nothing qualifies. Risks from the nature of operations, accounting estimates, cybersecurity, and environmental, social and governance factors fall outside the statement (Ohio Auditor of State).
Some states add their own rules. Ohio regulatory-basis filers use a modified approach with an 18-month window measured from fiscal year end. In North Carolina, units taken over by the Local Government Commission must include the disclosures even if the criteria are not met (NC State Treasurer).
Effective date, deadlines and consequences
GASB 102 is effective for fiscal years beginning after June 15, 2024 (paragraph 10). With comparative statements, the disclosures apply only to the current period. The 12-month window runs from the issuance date, which Baker Tilly describes as generally the audit opinion date, so a late audit moves the window later (Baker Tilly, September 22, 2025; Baker Tilly sells audit services).
GASB sets no fines. A missing or boilerplate disclosure becomes an audit issue, because your auditor evaluates management’s conclusions as part of the opinion. GASB 103 follows for fiscal years beginning after June 15, 2025 (CRI pronouncement chart, 2026 edition). Our guide to GASB 103 reporting model changes covers the MD&A and unusual item rules that often touch the same events, and our GASB 100 guide explains how to present an accounting change or error correction that surfaces during the review.
Worked example 1: one major taxpayer
Illustration: all names and figures are constructed. A city with a June 30, 2026 year end plans to issue its statements on December 15, 2026. A paper mill accounts for 14 percent of taxable assessed value and pays 22 percent of the charges in the water fund, which has $30 million of revenue bonds outstanding. On August 20, 2026 the mill announced it will close in March 2027.
- Known: yes, before issuance.
- Vulnerable: 14 percent of the levy and 22 percent of the revenue that repays the water bonds are each large enough to treat as substantial.
- Event: the announcement has occurred and the closure falls within 12 months of issuance.
- Reporting units: the primary government through property tax, and the water fund separately because it reports revenue debt.
The property tax loss may not reach revenue until the next assessment, but that does not defer the note. GASB says the disclosures are generally intended to be made before the ramifications are felt, and it uses a major taxpayer’s departure as its example (GASB 102, paragraphs B24 and B28). If the council adopted a water rate increase before issuance, the note describes it as mitigation. A plan the council has only discussed stays out.
Worked example 2: a state debt limit
Ohio law caps a school district’s net indebtedness at nine percent of tax valuation. A district certified as a special needs district may go up to twelve percent plus a growth-based amount (Ohio Revised Code 133.06, checked October 16, 2026).
Illustration: the district and its figures are constructed. A district has tax valuation of $1.2 billion, so its limit is $108 million. Net indebtedness is $97 million, leaving $11 million of headroom. In September 2026 the board resolved to replace a failing middle school at an estimated $25 million.
| Scenario | Headroom vs. need | Disclose? |
|---|---|---|
| Net debt $97 million, $25 million project resolved | $11 million headroom, $14 million short | Yes: the limit, the resolution as the event, any mitigation taken |
| Same, but special needs certification received before issuance | Limit of at least $144 million, headroom of at least $47 million | Likely no: mitigation removed the vulnerability |
| Net debt $30 million, no borrowing planned | $78 million headroom | No: the limit exists but creates no vulnerability |
The third row follows GASB’s reasoning that a government with little general obligation debt is not vulnerable just because a state limit exists (paragraph B22). The second matches BDO’s example of a college whose debt cap was raised by legislation before issuance (BDO, April 10, 2024; BDO sells audit services).
Records you must keep
GASB says you need not conduct an extensive search for potential events (paragraph B29), but you must show your work. The Ohio Auditor of State expects management to document its analysis and conclusions, share it with auditors, and carry a list of concentrations and constraints forward each year. Keep:
- A register of every concentration and constraint considered, including those that did not qualify and why.
- The revenue or expense share behind each concentration, by reporting unit.
- Statute or covenant citations for each constraint and the calculated headroom.
- Dated notices and board actions, the expected issuance date, your probability reasoning and completed mitigating actions.
What to set up in your systems
Most of the data already sits in systems you run. The task is pulling it together on a schedule rather than at the end of the audit.
- Property tax system: a saved top-taxpayer report by assessed value and levy share. The ACFR statistical section already presents the ten largest property taxpayers for the current year and nine years ago, so one query serves both (New Jersey Department of Education, no date shown).
- Utility billing: customer revenue share for each enterprise fund with revenue bonds.
- General ledger: revenue source codes detailed enough to show each grantor, appropriation or tax type; see our guide to ERP reporting and analytics.
- Debt management: a running legal debt margin calculation. DebtBook describes itself as debt and lease management software that generates year-end ACFR notes and supports GASB 87 lease accounting (GFOA vendor page, no date shown). Its page does not mention a GASB 102 module.
- Labor and procurement: bargaining agreement expiration dates and sole-source supplier contracts. Refresh the whole register at year end and again shortly before issuance.
How we researched this
We read the full text of GASB Statement No. 102, including the Basis for Conclusions and Appendix C, plus guidance from the Ohio Auditor of State and the North Carolina State Treasurer. We compared audit firm summaries, noting that those firms sell audit services, and checked the Ohio statute directly. The worked examples are constructed illustrations. Sources were checked on October 16, 2026.
Related guides
- ACFR: Sections, Timeline and How to Produce It
- GASB 34 Reporting: Requirements and 2026 Changes
- GASB 103 Financial Reporting Model Changes Explained
Frequently asked questions
When is GASB 102 effective?
It applies to fiscal years beginning after June 15, 2024. For most governments the first required report was the year ending June 30, 2025, and for calendar-year governments it was December 31, 2025.
Is a major taxpayer always a GASB 102 concentration?
A large taxpayer is a concentration, but you disclose only if it creates vulnerability to a substantial impact and an event such as a closure has occurred, has begun or is more likely than not within 12 months of issuance. A stable taxpayer with no announced change usually needs no note.
Do we have to disclose our state debt limit?
Only if you are close enough to the limit to be vulnerable and an event, such as a project that needs new borrowing, has occurred or is likely within the window. GASB says a government with little general obligation debt is not vulnerable just because a limit exists.
Does a revenue bond-funded enterprise fund need its own assessment?
Yes. GASB 102 requires the criteria to be assessed for the primary government and every reporting unit that reports revenue debt. A utility fund that depends on a few large customers can meet the test when the government as a whole does not.
Sources
- GASB, Statement No. 102, Certain Risk Disclosures, December 2023
- Ohio Auditor of State, GASB 102 FAQs, updated January 2, 2026
- North Carolina State Treasurer, Memorandum 2026-03, August 26, 2025
- Ohio Revised Code Section 133.06, checked October 16, 2026
- BDO, GASB 102, Certain Risk Disclosures, April 10, 2024
- Baker Tilly, article on GASB 102 compliance, September 22, 2025
- Carr, Riggs & Ingram, GASB pronouncement chart, 2026 edition, no exact date shown
- New Jersey Department of Education, ACFR statistical section guide, no date shown
- GFOA, About DebtBook, no date shown
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
