GASB Issues Statement No. 105 – Subsequent Events

Time to ring in the New Year with a new standard! Just before the holidays, the Governmental Accounting Standards Board (GASB) released Statement No. 105, Subsequent Events, which becomes effective for fiscal years beginning after June 15, 2026, and for all reporting periods thereafter.

Objective

GASB 105 aims to improve financial reporting for subsequent events by clarifying definitions, time frames, and disclosure requirements. These changes promote consistency and better meet the needs of financial statement users.

Definitions in GASB 105:

• “Subsequent events” are transactions or other events that occur after the financial statement date but before the date the statements are available to be issued.
• The “date the financial statements are available to be issued” is the date financial statements are complete, GAAP-compliant, and have received necessary approvals for issuance.
• “Recognized events” is a subsequent event that should be incorporated into measurement of accounting estimates reported as of the financial statement date. Identifying recognized events requires professional judgement and knowledge of facts and circumstances (for instance, bankruptcy of a major water authority’s customer during the subsequent events time frame may be incorporated into measurement of uncollectible accounts receivable).
• “Non-recognized event” is a subsequent event that has a significant effect (favorable or unfavorable) on the basic financial statements in the period in which the event occurs AND such an event is either:
  • One of the following specific events: debt-related transaction, government combination/disposal of government operations, change to legally separate entities, OR
  • Of such a nature to be essential to a user’s analysis for making decisions or assessing accountability

Disclosure Requirements

• Disclose in the footnotes the date through which subsequent events have been evaluated, regardless of whether recognized or non-recognized events exist.
• For non-recognized events, the following will be required to be disclosed by reporting unit:
  • Description of the non-recognized event
  • Estimate of the effect on the basic financial statements or reason why an estimate cannot be made.

If you have questions about implementing GASB 105, please contact your audit team.