Government Regulatory Update

GASB 102: Certain Risk Disclosures – What You Need To Know

Jennifer L. CruverKibi, CPA

The Governmental Accounting Standards Board (GASB) has issued Statement No. 102, Certain Risk Disclosures. GASB 102 will be effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter.

What is the objective of GASB 102?

The objective of GASB 102 is to provide users of government financial statements with essential information about risks related to a state or local government’s vulnerabilities due to the variety of risks they face. These are risks that could negatively affect the level of service they are able to offer or their ability to meet obligations as they come due. Although governments have been required to disclose information about their exposure to some of those risks, key information regarding common risks among state and local governments has not been routinely disclosed because there hasn’t been an explicit requirement to do so.

What are the key aspects of GASB 102?

GASB 102’s end goal is to provide users of financial statements with essential information regarding risks related to a government’s vulnerabilities due to certain concentrations or constraints.

A concentration is defined as a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources. Examples of a concentration included in the guidance (but not limited to) are: employers, industries, inflows of resources, workforce covered by collective bargaining agreements, providers of financial resources, and suppliers of material, labor, or services.

A constraint is defined 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.  Examples of constraints included in the guidance (but not limited to) are: limitations on raising revenue, limitations on spending, limitations on the incurrence of debt, and mandated spending.

Concentrations and constraints may impact a government’s capacity to obtain resources or control spending.

What is now required of local governments?

Governments must assess whether a concentration or constraint meet ALL the following criteria for footnote disclosure:

  • The concentration or constraint is known to the government prior to financial statements issuance,
  • The concentration or constraint makes the government vulnerable to the risk of a substantial impact, and
  • An event or events associated with the concentration or constraint that could cause the substantial impact either has occurred or is more likely than not to begin to occur within twelve months of financial statement issuance.

If all three criteria listed above are met, the government must disclose the following information:

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

What should your government do to prepare for GASB 102?

Assess whether there are any potential concentrations or constraints within your government. For each concentration or constraint, assess whether it makes your government vulnerable to a risk of a substantial impact. Then evaluate whether a triggering event is taking place that will necessitate footnote disclosure. Concentration examples could be a substantial employer in your municipality is closing and this event will have a substantial negative impact on future revenue; a large source of revenue relied upon for operations will no longer be available in the future; or there will be a substantial decline in a specific revenue source that is a sole source of bond repayment. Examples of constraints could be the state-imposed debt limit or a voter-approved property tax cap.

If you have any questions regarding GASB 102 please contact us.

Government Regulatory Update

GASB 101: Compensated Absences – An Overview

Jennifer L. CruverKibi, CPA

The Governmental Accounting Standards Board (GASB) issued GASB Statement #101, Compensated Absences in June 2022. We have a summary of this statement, how it will affect your organization’s financial reporting, and how you can prepare for implementation.

What is the objective of GASB 101?

The purpose of GASB 101 is to address and update the recognition and measurement guidance of compensated absences while refining the related disclosure requirements. GASB 101 aligns guidance under a unified model while amending certain previously disclosures.

What are the key parameters of GASB 101?

  •  GASB 101 requires an organization to recognize a compensated absence liability for 1) leave that has not been used but is more likely than not (i.e. likelihood is greater than the %) to be used or settled in the future; 2) leave that has been used but not yet paid in cash or settled (including salaries and applicable payroll taxes). Examples of compensated absences include vacation (or annual) leave, sick leave, holidays, etc.
  • A liability should be recognized for leave that has not been used if (a) the leave is due to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.
  • Liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—are not to be recognized until the leave commences and is used. For measuring liability for leave that has not been used, use the employee’s pay rate as of the date of the financial statements.
  • Leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included as a liability for compensated absences.
  • A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities.
  • Expenditures should be recognized for the amount that normally would be liquidated with expendable available financial resources.
  • For the notes to financial statements, GASB 101 amends the existing disclosure guidance by now only requiring disclosure of the net change in the liability (instead of showing gross additions and deletions), as well as no longer requiring to disclose which governmental funds are used to liquidate liability.

When is GASB 101 effective?

GASB 101 will be effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. Earlier application is encouraged.

What Should Your Organization Do to Prepare for GASB 101?

We recommend you start preparing now. GASB 101 requires an organization to accrue employee leave differently than in the past, especially leave that wasn’t paid out at termination (such as “use it or lose it” leave). Under GASB 101, an organization must now analyze how much of the employee leave balances at year end are more likely than not to be used as time off in future reporting periods. This analysis will take time, and you may need to compile historical data to analyze use trends, by type of employee (for instance, how much uniform and non-uniformed employees use sick leave in the subsequent year regardless of whether they receive payments for such leave at termination).

In estimating the leave that is more likely than not to be used or otherwise paid or settled, you should consider criteria such as policies (which may differ by employee class) related to compensated absences and how your organization has typically handled payment of compensated absences. You may consider amending your PTO policies for improved clarity and streamlining of your financial reporting. Also, be sure to document the factors considered in the estimation process (such as the trends, relevant historical information, and how the information was obtained), as well as flow assumptions.

Be sure to reach out to your audit team with any questions during the process.


American Rescue Plan Update: Additional Flexibility With ARPA Flex

Jennifer L. CruverKibi, CPA

When Congress approved the final 2023 budget package in December through the Consolidated Appropriations Act of 2023, it contained a significant provision allowing for additional flexibility in the use of Coronavirus State and Local Fiscal Recovery Funds (SLFRF).  The following grant expenditures now eligible under this ARPA Flex provision include:

-Spending to provide emergency relief from natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.

-Spending on transportation infrastructure eligible projects and matching funds.

-Spending on any program, project, or service that would also be eligible under HUD’s Community Development Block Grant program.

However, you should be aware this new flexibility has limitations. The amendment puts a cap on the amount a grantee can spend on the items listed above.  This cap is greater of $10 million or 30% of the total grant amount.  The amendment does not include any new spending mandates or conditions that would elevate the risk of claw back of grant funds.

The U.S. Treasury has 60 days from Congress’s passing of budget to finalize the ARPA Flex changes within SLFRF rules, which is anticipated in February.  Stay tuned for more updates.

Government Reporting

GASB Refresher and New Updates

Jennifer L. CruverKibi, CPA

A GASB Refresher

As a reminder, the following are pending Governmental Accounting Standards Board (GASB) pronouncements for the December 31, 2022 reporting periods:

  • GASB 87, Leases
  • GASB 91, Conduit Debt Obligations
  • GASB 92, Omnibus 2020
  • GASB 97, Certain Component Unit Criteria


The purpose of GASB 87 is to address accounting and financial reporting for leases.

What is a lease?

A lease is a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction.

Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the lease’s guidance, unless specifically excluded in GASB 87. Short-term leases, where the maximum possible term under the lease contract is 12 months or less (including options to extend), are also excluded from the GASB 87.

Under GASB 87, there is no longer a classification of leases into operating or capital. This Statement assumes that all leases contain the element of financing. Some government contracts that transfer the right to use an asset require only a nominal amount, such as $1 per year. This represents a non-exchange transaction, which does not fall under the scope of GASB 87.

What reporting is my organization responsible for?

If you are a lessee….

If you are leasing the item, you will set up an intangible lease asset and a liability equal to the present value of future lease payments.  Over the years of the lease (or useful life of the asset if shorter), you will amortize the asset.  You will also reduce the liability by the principal portion of lease payments made.

If you are a lessor….

If you lease the item to another entity, you will record a lease receivable (which generally includes the same items as a lessee’s liability) and a deferred inflow at the onset of the lease.  Continue to depreciate the leased asset and recognize revenue over the lease term.  The lease receivable will reduce for cash received, and the deferred inflow will reduce for the revenue recognized.

Some Helpful Tips to Assist with Implementation of GASB 87

  • Gather information for all outstanding leases and evaluate the terms and conditions. Identify the length of lease, the interest rate to apply, and the useful life of the asset.
  • If an interest rate is not determined by the lessee, the estimated incremental borrowing rate should be used.
  • Consider lease incentives, contracts with multiple components, lease modifications, and termination of leases.
  • Implement retroactively by restatement for all periods presented.
  • The GASB issued several implementation guides (2019-3, 2020-1, 2021-1), as well as GASB 99, that provide various clarifications on GASB 87.
  • Be mindful of changes to lease agreements that may trigger an adjustment to lease liability/receivable.


GASB 91 addresses reporting of conduit debt obligations and is effective for reporting periods beginning after December 15, 2021.  The purpose of this standard was to have consistent treatment and reporting of conduit debt.

Five circumstances must be present for conduit debt:

  • There are at least three parties (issuer, third-party obligor, and debt holder/trusteed) involved.
  • The issuer and third-party obligor are not within the same financial reporting entity.
  • Debt has to stand on its own.
  • The borrower, not the government, is responsible for payments.
  • The borrower, not the government, receives the proceeds from the debt issuance.

Under GASB 91, the issuer does not record a liability unless they provide an additional/voluntary commitment to support debt service. Examples of additional/voluntary commitments include extending a moral obligation pledge, extending an appropriation pledge, extending a financial guarantee, and pledging the entity’s own property, revenue or other assets as security.

How does my organization implement GASB 91?

If conduit debt was previously recorded as debt within the government financial statements, most likely it won’t need to be recorded upon implementation of GASB 91. Review the agreements and evaluate whether additional/voluntary commitments are present. If not, only disclosures are required.

If conduit debt was previously only disclosed in the government financial statements, this standard should have minimal impact unless there are additional/voluntary commitments present. Be sure to visit the standard for specific disclosure requirements.


Issued in 2020, GASB 92 is an omnibus standard that addresses several issues including the effective date of lease standards (superseded by GASB 95), various post-employment benefit issues, asset retirement obligation measurement, public entity risk pools issue, nonrecurring fair value measurement issue, and terminology for derivative instruments. We encourage you to review the Omnibus if any of these items are applicable to your organization.


Two specific paragraphs from GASB 97 were effective immediately and the rest of the statement regarding Section 457 Plans was effective for reporting periods beginning after June 15, 2021.

What should my organization do to implement GASB 97?

We recommend you evaluate your Section 457 plans and determine whether they meet the definition of a pension plan. A pension plan is an arrangement through which pensions are determined, assets dedicated for pensions are accumulated and managed, and benefits are paid as they come due. If your plan does not meet this definition, then you would report it as an other employee benefit plan for accounting purposes and apply GASB 84 reporting (meaning the plan would most likely continue to NOT be reported in the government’s financial statements).

Upcoming GASB’s


GASB 94 addresses public-private and public-public partnerships (PPP) and availability payment arrangements (APA) and is effective for fiscal years beginning after June 15, 2022. A PPP is an arrangement in which a government (the transferor) contracts with an operator to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange like transaction.  If a PPP meets the definition of a lease, it should still follow GASB 87.

If a PPP meets the definition of a Service Concession Arrangement (SCA), currently you are under GASB 60. However, GASB 94 further defines an SCA as a PPP. If your government has such a transaction, be sure to visit the guidance for further explanation.

An APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction.

The government recognizes new or improved underlying PPP assets very similar to GASB 87 but with different terminology. Discuss with an audit team member if your governmental entity potentially has PPP or APA’s.


GASB 96 addresses subscription-based information technology arrangements (SBITA) and will be effective for fiscal years beginning after June 15, 2022. A SBITA is defined as a contract with a vendor that conveys control of the right to use another party’s information technology (IT) software, alone or in combination with tangible capital assets, as specified in the contract for a period of time in an exchange or exchange like transaction.  An example of SBITA would be remote access to software applications or cloud data storage.

Accounting for SBITA’s is based on the accounting for leases under GASB 87, including short-term exceptions for contracts with a maximum term of 12 months or less. A government generally should recognize a right-to-use subscription asset and a corresponding subscription liability at present value of future installment payments.

Activities associated with a SBITA are accounted for in one of three stages and the costs should be accounted as such:

  • Preliminary Project State (evaluating alternatives, determining needed technology, selecting a vendor) – expensed as incurred
  • Initial Implementation Stage (all ancillary charges necessary to place the subscription asset into service) – generally capitalized
  • Operation and Additional Implementation Stage (Subsequent implementation activities, maintenance, and other activities) – generally expensed unless they meet specific capitalization criteria)

It is important to review all contracts and determine whether such transactions would fall under the definition of a lease, a PPP, or a SBITA and adopt the appropriate GASB accordingly.


GASB 99 Omnibus addresses a variety of topics and is applicable in various phases. These topics include:

  • Financial guarantees
  • Derivative instruments
  • Leases
  • PPP’s
  • SBITA’s
  • Transition from LIBOR
  • Supplemental Nutrition Assistance Program (SNAP)
  • Nonmonetary transactions disclosures
  • Pledges of future revenues
  • Updating certain terminology for consistency with existing authoritative standards

GASB 99 is applicable in various phases:

  • The requirements related to the extension of the use of LIBOR, accounting for SNAP distributions, disclosures for nonmonetary transactions, pledges of future revenues by pledging governments, clarifications of certain provisions in GASB 34, and terminology updates are effective upon issuance (April 2022).
  • The requirements related to leases, public-public and public-private partnerships, and SBITA are effective for fiscal years beginning after June 15, 2022.
  • The requirements related to financial guarantees and the other requirements related to derivative instruments are effective for fiscal years beginning after June 15, 2023.

GASB 100

GASB 100 addresses accounting changes and error corrections and is effective for the fiscal year beginning after June 15, 2023. GASB 100 removes prior period adjustments from Generally Accepted Accounting Principles; clarifies, expands, and distinguishes among three classifications of accounting changes and error corrections; and provides guidance on presentation of RSI, SI, and OI when changes or corrections are made.

GASB 100 prescribes accounting and financial reporting for each category of accounting change and error corrections. It requires that:

  • Changes in accounting principles and error corrections be reported retroactively by restating prior periods.
  • Changes in accounting estimates be reported prospectively by recognizing the change in the current period.
  • Changes to and within the financial reporting entity be reported by adjusting beginning balances of the current period.

The statement also addresses how accounting changes and error corrections should be displayed in financial statements, disclosed in notes, and presented in required supplementary information.

GASB 101

GASB 101 addresses compensated absences recognition and refines related disclosure requirements and is effective for fiscal years beginning after December 15, 2023. The guidance will apply to: vacation/annual leave, sick leave, PTO, sabbatical leave during which the employee is not required to perform any duties for the employer, and any other leave not specifically excluded in the guidance.

Under GASB 101, compensated absence liability is recognized for leave that: accumulates, compensation for services already rendered, and more likely than not to be used or settled. You should measure liability for leave based upon the applicable pay rates in effect at the end of the reporting period. GASB 101 amends the existing disclosure guidance and requires only the net change in the liability to be disclosed (as opposed to additions and deductions in roll forward), and you are no longer required to disclose which governmental funds are used to liquidate liability.

If you have any questions regarding these standards, please contact a member of your audit team.