February 25, 2026
GASB Issues Statement No. 105 for Reporting Subsequent Events
The Governmental Accounting Standards Board (GASB) has issued Statement No. 105, Subsequent Events (the Statement). The standard is designed to clear up long-standing confusion and diversity in practice for how state and local governments report events that happen after their fiscal year-end but before financial reports are issued.
For many governments, determining what needs to be recorded or disclosed in the “subsequent period” between the fiscal year-end and the financial statement issuance date has been a challenge. GASB 105 provides a standardized framework to ensure these events are handled consistently across the board.
Key Changes You Need to Know
Previously, the timeframe for evaluating subsequent events ended at the “issuance date,” a term that was never formally defined by GASB. The timeframe has been clarified to refer to the date the financial statements are “available to be issued”.
Financial statements are considered “available to be issued” when:
- They are complete in a format that complies with GASB
- All necessary approvals for issuance have been obtained
Recognized vs. Nonrecognized Subsequent Event Categories
The Statement sharpens the distinction between two categories:
| Category | Definition | Impact on Financials |
|---|---|---|
| Recognized Events | Provide evidence of conditions that existed at the financial statement date. | Adjust the amounts reported in the financial statements (e.g., a major customer’s bankruptcy indicating distress at year end). Do not adjust for an event such as a fire or flood, during the subsequent events time frame, as these events are not indicative of conditions that existed at the financial statement date. |
| Nonrecognized Events | Relate to conditions that arose after the financial statement date that may have a significant effect (favorable or unfavorable) that is recognized or disclosed in the basic financial statements in the reporting period in which the event occurs. | Disclose in the notes; do not change the year-end numbers. |
Disclosure Requirements
The Statement highlights specific nonrecognized events that must be disclosed if they are significant:
- Debt-related transactions (excluding routine debt service payments)
- Government combinations or disposals of operations
- Changes in the legally separate entities that make up the reporting entity
- Any other event essential to a user’s ability to make decisions or assess accountability
For these events, governments must provide a description and an estimate of the financial effect (or explain why an estimate cannot be made).
Implementation Timeline
The Statement is effective for fiscal years beginning after June 15, 2026 and earlier application is highly encouraged. The requirements should be applied prospectively.
