GASB 40 – Deposit & Investment Risk Disclosures
    Amendment of GASB Statement No. 3
    Effective for Periods Beginning after June 15, 2004
    Provide users with information to assess common risks inherent in deposit and investment 
    transactions
    5 Types of Risks and Disclosures for those Specific Risks
    2    Deposit & Investment Disclosures
    Credit Risk
    The risk that an issuer or other counterparty to an investment will not fulfill its obligations.
    Provide information disclosing the credit quality ratings of investments in debt securities as 
    described by nationally recognized statistical rating organizations.
    Unless there is information to the contrary, obligations of the US Government or obligations 
    explicitly guaranteed by the US government are not considered to have credit risk.  
    Disclose the credit ratings of external investment pools, money market funds, bond mutual funds, 
    and other pooled investments of fixed-income securities.
    Disclosure is required and the investment is unrated, the disclosure should indicate that fact.
    3     Deposit & Investment Disclosures
    Custodial Credit Risk
    The custodial credit risk for deposits or investments is the risk that, in the event of the failure of a 
    depository financial institution or the counterparty to a transaction, a government will not be able 
    to recover deposits, the value of the investment, or will not be able to recover collateral securities 
    that are in the possession of an outside party.  
    Deposits are exposed if they are not covered by depository insurance and the deposits are:
    -  Uncollateralized,
    -  Collateralized with securities held by the pledging financial institution (PFI), or
    -  Collateralized with securities held by the PFI’s Trust Department or Agent but not in the 
       depository-government’s name.
    Investment securities exposed to custodial credit risk if the securities are uninsured, are not 
    registered in the name of the government, and are held by either the counterparty or 
    counterparty’s trust department or agent but not in the government’s name.
    4     Deposit & Investment Disclosures
    Concentrations of Credit Risk
    The risk of loss attributed to the magnitude of a government’s investment in a single issuer.
    Provide information about the concentration of credit risk associated with investments by 
    disclosing:
    -  By amount and issuer,
    -  Investments in any one issuer that represent 5% or more of total investments based on the level 
       of detail.
    Investments issued or explicitly guaranteed by the US Government and investments in mutual 
    funds, external investment pools, and other pooled investments are excluded from this 
    requirement.
     5    Deposit & Investment Disclosures
    Interest Rate Risk
    The risk that changes in interest rates will adversely affect the fair value of an investment.
    Disclose information about the interest rate risk for debt investments by investment type and 
    amount using one of the following methods:
    -  Segmented time distribution
    -  Specific Identification
    -  Weighted Average Maturity
    -  Duration
    -  Simulation Model
    Disclose the terms of investments with fair value that are highly sensitive to changes in interest 
    rates.
    -  Variable-rate Investments
    -  Asset-backed Investments
     6    Deposit & Investment Disclosures