The Governmental Accounting Standards Board (GASB) released a Preliminary Views (PV) document on Mar. 19, requesting public input on proposed disclosures related to severe financial stress (SFS) and probable dissolution (PD) for government entities. 

The PV aims to clarify and improve guidance surrounding going concern uncertainties (GCU) by distinguishing between financial stress and continued existence—two concepts that have been historically blended in practice.

According to GASB, some governments can face serious financial issues but still operate, while others may dissolve for reasons unrelated to fiscal distress. 

Under the proposal, governments would be required to disclose information if they meet criteria for either SFS or PD—or both. SFS disclosures would be triggered when a government is nearing or at insolvency, such as being unable to meet liabilities as they come due. These disclosures would include the causes of financial stress, government response and known effects. 

PD disclosures would apply if it’s probably a government will cease to exist within 12 months, regardless of financial condition. Required information would include reasons for dissolution, significance and the status of assets and liabilities.