GASB 105: What Government Finance Leaders Need to Know About Subsequent Events Reporting

As 2025 drew to a close, the Governmental Accounting Standards Board (GASB) issued Statement No. 105, Subsequent Events. While the requirement to disclose material subsequent events isn't new (previous guidance existed in GASB Statement No. 56), GASB's pre-agenda research revealed substantial diversity in practice. Statement No. 105 addresses these inconsistencies by clarifying time frames and specifying disclosure requirements.

Statement No. 105 defines a subsequent event as any transaction or other event that occurs after the financial statement date but before the date the financial statements are available to be issued.

Recognized and Nonrecognized Events

Recognized Events
A recognized event provides evidence of conditions that existed at the financial statement date. Such conditions often relate to estimates, such as the collectability of receivables or the outcome of pending claims. The effects of recognized events should be incorporated into amounts reported as of the financial statement date; therefore, disclosure of recognized events is not required.

Nonrecognized Events
A nonrecognized event does not relate to a condition that existed at the financial statement date, and is one of the following:

• A debt-related transaction (excluding leases, PPPs, SBITAs)
• A government combination or disposal of government operations
• A change to the legally separate entities that compose the financial reporting entity
• A transaction or other event of such a nature that disclosure is essential to a user's analysis for making decisions or assessing accountability

Notes to Financial Statements

For nonrecognized events, a description of the event and its effect should be disclosed in the notes to the financial statements. An estimate of the amount of the effect, or the reason why an estimate of the amount cannot be made, should also be disclosed. The date through which subsequent events have been evaluated should be disclosed, regardless of whether recognized or nonrecognized events exist.

GASB 105 is effective for fiscal years beginning after June 15, 2026 (fiscal year-end June 30, 2027). Early application is encouraged.

How to Prepare Now

Although GASB 105 is not required to be implemented until 2027, it makes sense to follow the new standard’s guidance if your government experiences a subsequent event. Here are practical steps you should take now:

Update Your Year-End Close Process and Build Your Subsequent Events Inventory

• Revise your year-end close checklist to incorporate GASB 105's definitions, time frame, and recognized vs. nonrecognized framework
• Identify events which may require evaluation under GASB 105 as either recognized or nonrecognized events

Strengthen Cross-Departmental Coordination

• Establish a process to capture potential subsequent events from all relevant departments (finance, legal, administration, HR, economic development)

Align with Your Auditors Early

• Engage your auditors now to discuss interpretations of significance, materiality thresholds for disclosure, and expectations for supporting evidence
• Clarify how the "available to be issued" date will be determined in your environment
• Coordinate on first-year implementation expectations

Partner with Redpath

As independent auditors and trusted advisors for government financial reporting readiness and compliance, our Government Services team can help you assess your current procedures against GASB requirements. We also help you develop customized checklists and templates, provide targeted training for finance and operational staff to strengthen understanding of key reporting triggers and disclosure expectations, and navigate complex classification and disclosure questions so your team is well prepared. Connect with us to learn how we can support your organization.