GASB 102 requires local governments to disclose certain known risks tied to concentrations and constraints. As municipalities prepare 2027 budgets, finance leaders should use the budget process to identify dependencies, limits, and events that may require future note disclosure, strengthening audit readiness, council transparency, and public trust before crisis arrives.

When Risk Becomes a Reporting Duty

GASB Statement No. 102, Certain Risk Disclosures, is a financial reporting standard for state and local governments. It requires disclosure of certain risks created by concentrations or constraints when those risks could substantially affect a government’s financial position. GASB states that the standard is effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter.

This is not just an audit issue. It is now a budget issue.

As municipalities turn in 2026-2027 budgets, they are already naming the assumptions that will shape future financial statements. Revenue forecasts. Grant renewals. Utility demand. Debt limits. Tax caps. Vendor dependence. Staffing pressure. These are not abstract items. They are signals.

Budgets tell the story before the audit confirms it.

What GASB 102 Requires Leaders to Watch

GASB 102 focuses on two ideas: concentrations and constraints.

A concentration exists when a government relies heavily on one source or a narrow group of sources. Examples include:

• One major employer in the tax base.
• One large utility customer.
• One major grant program.
• One industry driving local revenues.
• One vendor supporting critical operations.

A constraint is a limit on the government’s ability to raise resources or control spending. Examples include:

• Legal limits on taxes or fees.
• Debt agreement restrictions.
• Contractual limits on fund use.
• Environmental or water supply restrictions.
• Regulatory limits affecting operations.

A disclosure may be needed when the concentration or constraint is known before financial statements are issued, creates vulnerability to substantial impact, and is tied to an event that has occurred, has begun to occur, or is more likely than not to occur. GASB also says the disclosure should include the nature of the risk, the related event, and actions taken before issuance to reduce the risk.

The standard does not ask leaders to predict every storm. It asks them to name the clouds already forming.

What Municipalities Should Do

We know the weight of legacy systems; we understand the cost of the status quo. But GASB 102 gives finance leaders a practical opening: use the 2026-2027 budget process as an early-warning system.

1. Review major revenue assumptions for dependency risk.
2. Flag grants, contracts, and state funding that may change.
3. Identify tax, rate, debt, and legal limits.
4. Ask department heads about vendor and operational exposure.
5. Document events discussed during budget preparation.
6. Share findings with auditors before year-end close.

For SmartFusion users, GASB 102 should not require new accounting entries. It should require better documentation, better coordination, and better reporting discipline. SmartFusion supports fund ledger, budgeting, accounts payable, bank reconciliation, fixed assets, purchasing, project reporting, utility billing, and reporting tools within an integrated public sector ERP environment. Its Budget Preparation, Cost Allocation, Purchasing, Fixed Assets, and Work Orders modules can help staff see budget assumptions, shared costs, asset exposure, procurement dependence, and operational patterns more clearly.

A city that knows its risks. A county that documents its limits. A utility that sees its dependencies before the public feels them.

That is not paperwork. That is public trust.

As budgets move forward, do not let disclosure readiness wait for audit season. Lead now, document clearly, and give your community the honest financial picture it deserves.

Preparing for GASB 102 starts with having the right financial information at your fingertips. If your team is relying on disconnected systems or manual reporting, it may be time to take a closer look.