GASB Statement 105 Was Released – What to Know

Summary

• The Governmental Accounting Standards Board (GASB) issued Statement 105,¹ titled “Subsequent Events,” taking effect for fiscal years beginning after June 15, 2026, and all following reporting periods. Early adoption is permitted, with prospective application required.
• This statement improves subsequent-event financial reporting by enhancing existing guidance, improving consistency in recognition and disclosure requirements, and aligning the defined evaluation period closer to other U.S. standard setters such as the FASB (ASC 855) and the AICPA (AU-C 560).
• It updates the definition of a “subsequent event,” clarifies when financial statements must be adjusted versus when disclosure alone is required, and provides enhanced examples and terminology to support those judgments. It also introduces a requirement to disclose the date through which subsequent events were evaluated, regardless of whether any are recognized or disclosed.
• Accounting teams should continue annually assessing whether subsequent events require financial statement adjustment or just disclosure, incorporating the new guidance on required disclosures and the revised evaluation period.

Background

Previously, GASB Statement 56, issued in March 2009, was the source for guidance on subsequent events. It also covers several other topics. Since then, the FASB released revisions to its subsequent event guidance (ASC 855²), as did the AICPA (AU-C 560³). Both include terminology and recognition concepts that are different than Statement 56.

Due to these newer guidance sources, the GASB determined that Statement 56 required updates to avoid diversity in practice regarding subsequent event disclosure or financial statement adjustment requirements. Statement 105 was released on December 17, 2025.

Scope and applicability

GASB Statement 105 sets disclosure requirements for all state and local government financial statements. It defines a “subsequent event” as a transaction or other event that occurs after the date of the financial statements but before the financial statements are available to be issued.  The concept of the date “the financial statements are available to be issued” is explicitly defined in Statement 105 and lends itself to guidance from the AICPA auditing standards (AU-C 560) and the FASB accounting standards (ASC 855). The date the financial statements are available to be issued occurs when two conditions are met: the financial statements are complete in form and format in compliance with generally accepted accounting principles (GAAP), and all necessary approvals for issuance have been obtained.

Statement 105 defines two types of subsequent events:

• Recognized events: Events that provide evidence of conditions existing as of the financial statement date and therefore require adjustment to the financial statements. It affects estimates or accruals already reflected in the financial statements.
  • Example: Bankruptcy of a customer that impacts the collectability of receivables (requires professional judgment).
  • Not included: Major casualty events such as fires or floods, because they don’t relate to conditions existing at the financial statement date.
• Non-recognized events: Events that occur after the financial statement date and have a significant effect on the reporting period in which they occur but don’t inform about conditions that existed at the financial statement date.
  • These events aren’t recognized or adjusted in the financial statements.
  • Disclosure in the notes to the financial statements is required.

Disclosure criteria

Disclosure in the notes of financial statements is required if the following occur in the subsequent event period:

• Debt-related transactions (excluding routine debt service), such as issuances or refundings.
  • While not formally defined as debt-related transactions, leases, subscription-based IT arrangements and public-public partnerships also fall under this requirement if the information is essential to users’ decision-making or accountability assessments.

• Government combinations or disposals of government operations.
• Changes in the legally separate entities that compose the financial reporting entity.
• Any other transaction or event deemed essential to a user’s analysis for decision-making or assessing accountability.

For each non-recognized event that meets the criteria above, the notes must also include: 

• A description of the event and its effect.
• An estimate of the financial effect or an explanation of why an estimate cannot be made.

Separate from the event-specific disclosure criteria, Statement 105 requires all entities to disclose the date through which subsequent events were evaluated, regardless of whether any disclosures were required. This date is typically the same as the date of the independent auditor’s report.

Special considerations

Comparative financial statements and prior period note disclosures

Statement 105 provides no new guidance for non-recognized events in comparative financial statements. Entities should continue to apply GASB 62, which presumes that:

• A non-recognized event disclosed in a prior period shouldn’t be repeated in the comparative notes.
• The event would be recognized in the current period, with its impacts included in the current-period amounts and disclosures.

Reissued financial statements and existing note disclosures

Statement 105 doesn’t define “reissuance” when subsequent events are included in financial statements. When included, entities must evaluate them using:

• The date the financial statements were initially available to be issued.
• The reissuance date, using the established definition of when the financial statements are available to be issued to determine whether additional disclosures or adjustments are necessary.

Key considerations for governments and auditors

Governments have long dealt with subsequent event reporting requirements. While the new standard doesn’t significantly change how to report them, governments should add the revised terminology and concepts into their financial statements preparation process. This includes understanding the specific items that require disclosure and incorporating the new evaluation date disclosure requirement.

Auditors should consider:

• Are internal controls related to financial statement preparation and disclosure up to date? This includes updating documentation of audit-planning, risk assessment and internal controls.
• Have all applicable subsequent events been fully identified and appropriately assessed? Auditors should confirm that the complete population of subsequent events has been identified and considered under the guidance.
• Do the financial statements and notes include all required disclosure elements? Verify that the date through which subsequent events were evaluated is clearly stated.

Need help with accounting and financial reporting for your governmental entity? With our deep experience in audit, assurance and accounting for state and local governments, we’re available to discuss your needs. Contact Sikich today with any questions. 

• “Subsequent Events,” Statement 105, GASB. https://gasb.org/page/ShowPdf?path=GASBS%20105.pdf&title=GASB%20STATEMENT%20NO.%20105,%20SUBSEQUENT%20EVENTS
• “Subsequent Events,” ASC 855-10-20, FASB. https://asc.fasb.org/1943274/2147483374
• “Subsequent Events and Subsequently Discovered Facts,” AU-C 60, paragraph a10, AICPA. https://www.aicpa-cima.com/resources/download/aicpa-statements-on-auditing-standards-currently-effective