How should interest income be classified by public-entity risk pools?

Interest income for public-entity risk pools should be classified as non-operating revenue because it is not directly related to the primary operations or core activities of the risk pool. Public-entity risk pools primarily focus on providing insurance and risk management services to their members, which are typically local governments or other public entities. The core activities generate operating revenue, mainly from premiums charged to participants.

Interest income arises from the investment of assets held by the risk pool, which is a secondary activity instead of a core function of providing insurance coverage. Thus, this income is categorized under non-operating revenue, reflecting its nature as an income stream derived from investments rather than from the direct provision of services or products.

This classification helps in financial reporting and analysis, allowing stakeholders to distinguish between the earnings generated from normal operations and those resulting from other activities, such as investments. By recognizing interest income as non-operating revenue, it provides a clearer picture of the risk pool's operational performance and financial health.