Article

Evaluate federal funding risks amid financial reporting requirements

March 21, 2025 · Authored by Melissa Harman, Kinman Tong

As organizations and entities that are receiving federal funding, it’s crucial to stay informed about the evolving federal grants landscape, particularly in light of recent developments under President Donald Trump’s administration and the actions of the Department of Government Efficiency (DOGE).

The halting of federal grants and funding has raised significant challenges for organizations reliant on these resources. The uncertainty surrounding federal funding, exacerbated by political shifts and economic factors, necessitates a proactive approach to financial reporting and disclosures. As organizations assess their financial positions, it’s essential to consider the potential impact of these developments on liquidity and going concern evaluations.

Prepare your organization for necessary disclosures in your financial statements, specifically focusing on risks and uncertainties under Governmental Accounting Standards Board (GASB) Statement 102 and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 275, with the following insights into effective evaluation of risks and uncertainties.

Background

Considering the potential funding challenges posed by current federal administration policies and the actions of DOGE, it’s imperative organizations receiving federal funding conduct thorough evaluations of their financial disclosures.

By understanding the requirements under GASB 102 and FASB ASC 275, you can prepare financial statements that accurately reflect the potential impacts of funding halts and liquidity issues.

As you draft your disclosures, consider the implications for going concern evaluations and be proactive in communicating any uncertainties to stakeholders. Staying informed and prepared will help navigate these turbulent times effectively. By maintaining transparency and adhering to the relevant accounting standards, your organization can better communicate the risks associated with federal funding uncertainties.

GASB 102 risks and uncertainties

Under GASB Statement No. 102, Certain Risk Disclosures, entities must disclose information regarding risks and uncertainties that could materially affect their financial statements. This includes any uncertainties related to the availability of federal funding.