When governments first begin reviewing GASB 103, many of the conversations naturally focus on the broader Financial Reporting Model changes, especially the changes to the Management Discussion & Analysis. But one area that’s already generating a significant amount of discussion is the treatment of unusual or infrequent items.
At first glance, the concept may seem straightforward: If something unusual happens, disclose it appropriately.
In practice, however, the questions become much more nuanced.
- What exactly qualifies as unusual or infrequent?
- How should these items be presented in the financial statements?
- What documentation should finance teams maintain?
- And perhaps most importantly, how do governments apply the guidance consistently?
For many organizations, this portion of GASB 103 may require more judgment and internal discussion than initially expected.
Why the Unusual or Infrequent Items Section Matters
Governments regularly experience transactions or events that fall outside normal operations. Some may be operational disruptions. Others may involve one-time transactions, litigation outcomes, disaster-related activity, or significant economic events.
Historically, these items were often discussed differently across organizations, making it difficult for financial statement users to consistently interpret their impact.
One of the goals of GASB 103 is to improve clarity and consistency around how these items are identified and presented within the financial statements.
That sounds manageable in theory—but implementation tends to raise practical questions quickly.
The Real Challenge Is Often Judgment
The difficulty usually isn’t identifying a clearly major event.
The challenge is determining where the line gets drawn.
Finance teams may find themselves asking questions such as:
- Was this event outside normal operations?
- Is this truly infrequent, or just uncommon?
- Does this require separate presentation?
- What level of disclosure is appropriate?
- Would auditors or stakeholders expect this to be highlighted differently?
These discussions become especially important when transactions have a noticeable impact on financial results or public visibility.
Examples That May Trigger Discussion
Every government is different, but some common scenarios that could lead to additional evaluation under GASB 103 may include:
Natural Disasters or Emergency Events
Wildfires, floods, severe storms, or other emergency situations can create significant unexpected expenditures, insurance recoveries, or operational disruptions. Remember to consider the environment that your organization operates in. Wildfires for example may be more common for some and less likely to be an unusual or infrequent event.
Large Litigation Settlements
Significant legal settlements or claims activity may raise questions around presentation and disclosure depending on the nature and timing of the event. The question one must ask as well is; is this legal settlement common for our organization?
Major Asset Sales
The sale of property, infrastructure, or other large assets outside normal activity may require additional evaluation.
Cybersecurity Incidents
As cybersecurity events become more common in local government, organizations may need to consider how related financial impacts are presented and disclosed.
One-Time Grant or Funding Activity
Large, nonrecurring funding awards or settlements may create reporting considerations if they materially impact financial results.
The key takeaway is that the accounting itself may not always be the hardest part.
The more difficult task is often evaluating how the event should be communicated clearly and consistently within the financial statements.
Documentation Will Matter More Than Ever
One area governments should not underestimate is the importance of documenting conclusions and judgments during implementation.
Auditors will likely ask:
- Why was an item classified a certain way?
- What factors were considered?
- Was the event both unusual and infrequent?
- How was consistency evaluated compared to prior years?
Without clear documentation, finance teams may find themselves revisiting the same discussions repeatedly during year-end close and audit fieldwork.
Creating internal processes now for evaluating unusual or infrequent items can help reduce last-minute stress later.
This Is Bigger Than a Disclosure Exercise
One of the most important things governments should recognize is that GASB 103 is not simply a “new disclosure requirement.”
It may affect:
- Financial statement presentation
- Internal review processes
- Communication between departments
- Audit preparation workflows
- Year-end close timelines
- Management review procedures
For organizations already balancing staffing shortages, tight reporting deadlines, and institutional knowledge loss, even seemingly small reporting changes can create operational challenges if preparation starts too late.
Bottom Line: The Earlier Discussions Begin, the Better
Like many GASB implementations, the organizations that tend to navigate the transition most smoothly are the ones that begin discussing practical application early—not during the final stages of audit preparation.
Reviewing prior-year transactions, evaluating gray areas, and discussing expectations internally ahead of year-end can help finance teams feel more prepared when implementation begins.
GASB 103 may introduce several important changes to the Financial Reporting Model, but unusual or infrequent items are already emerging as one of the areas most likely to generate discussion, judgment, and practical implementation questions for local governments.
If your team is beginning to evaluate the impact of GASB 103, LSL is here to help. Contact us today!
Want a deeper dive into GASB 103 – check out Riley’s webinar Navigating the New Financial Reporting Model.
