GASB Updates Disclosure Requirements for Subsequent Events

In under a minute

• The Governmental Accounting Standards Board (GASB) issued Statement 105, which clarifies long-standing guidance on how governments evaluate and disclose events occurring after the financial statement date.
• The statement clarifies that subsequent events are evaluated through the date the financial statements are “available to be issued,” replacing the previously undefined “issuance date.”
• The statement refines the distinction between recognized and nonrecognized events and introduces clearer note disclosure requirements for nonrecognized events that have a significant effect.
• Governments now must disclose the date through which subsequent events were evaluated and provide descriptions and estimated effects (or reasons why an estimate cannot be made) for significant nonrecognized events.
• Statement 105 is effective for fiscal years beginning after June 15, 2026, with early application encouraged.

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Breaking it down

On Dec. 17, 2025, the GASB released Statement 105, “Subsequent Events,” to enhance and clarify the accounting and disclosure requirements for events occurring after the financial statement date. The statement replaces guidance that had remained largely unchanged for decades and reflects the GASB’s effort to reduce diversity in practice and improve comparability across governments.

Basics of the GASB statement

The purpose of Statement 105 is to improve consistency, comparability, and transparency in how governments identify, evaluate, and disclose subsequent events.

The statement clarifies these items:

• The time frame during which subsequent events must be evaluated
• The distinction between recognized and nonrecognized subsequent events
• The specific disclosures required for significant nonrecognized events

These changes are intended to provide users of governmental financial statements with more decision-useful information while reducing uncertainty and variation in practice among preparers and auditors.

Crowe observation: Much of the guidance replaced by Statement 105 originated decades ago and was rooted in auditing literature rather than governmental accounting standards. Over time, this led to informal practices and inconsistent interpretations. Statement 105 provides an opportunity for governments to realign processes with clearer, principles-based guidance.

What is the scope of GASB Statement 105?

Statement 105 applies to the financial statements of all state and local governments. The guidance covers all transactions and other events that occur after the date of the financial statements but before the date the financial statements are available to be issued.

While governments have long evaluated subsequent events, Statement 105 standardizes the framework used to determine:

• When the evaluation period ends
• Which events affect amounts reported at year-end (recognized event)
• Which events require disclosure because of their significance to users

The statement does not introduce new types of subsequent events; rather, it clarifies how existing events should be evaluated and communicated.

How is the subsequent events evaluation period defined?

Statement 105 defines subsequent events as events occurring after the financial statement date but before the financial statements are available to be issued. Financial statements are considered available to be issued when both of the following have occurred:

• Statements are complete in a form and format compliant with GAAP
• Approvals necessary for issuance have been obtained

This clarification replaces the previously undefined concept of an “issuance date” and acknowledges differences in governmental approval structures. Importantly, while the date the financial statements are available to be issued often aligns with the audit report date, the two dates are not synonymous and might differ depending on a government’s circumstances.

Crowe observation: While documenting which approvals are considered necessary for issuance is not required by the statement and that information would not be included within the disclosure, governments with multiple approval steps or complex governance structures should carefully record those steps. For example, in some governments, issuance occurs after management and governing body approvals, while in others, governing body acceptance occurs after issuance. This determination will require professional judgment and should be applied consistently from period to period.

Defining recognized and nonrecognized subsequent events

Recognized subsequent events

A recognized subsequent event provides evidence about conditions that existed at the financial statement date and therefore affects amounts reported as of that date, often through changes to accounting estimates.

Determining whether conditions existed requires evaluation of the relevant facts and circumstances. For example, a post-year-end bankruptcy of a water utility’s major customer might indicate financial deterioration that existed at year-end, whereas a casualty event occurring after year-end generally would not. In the instance of the bankruptcy of a major customer, the government’s financial statements as of the financial statement date should incorporate that event into the measurement of any uncollectible accounts receivable with that specific vendor.

Crowe observation: Statement 105 reinforces the link between recognized subsequent events and accounting estimates, highlighting the importance of timely communication between the government’s operational areas and the accounting function.

Nonrecognized subsequent events

A nonrecognized subsequent event is an event that results in a significant effect that does not relate to conditions existing at the financial statement date but is important to users’ understanding of the government’s financial statements.

To promote consistency, Statement 105 identifies certain event types that must be evaluated for disclosure when significant, including:

• Debt-related transactions (other than routine debt service payments)
• Government combinations or disposals of operations
• Changes to the legally separate entities constituting the financial reporting entity

Other subsequent events continue to be evaluated using professional judgment to determine whether disclosure is essential to users’ analyses for making decisions or assessing accountability.

Crowe observation: By identifying specific event categories while preserving professional judgment, Statement 105 strikes a balance between clarity and flexibility that reflects the diversity of governmental operations.

What are the disclosure requirements?

For each nonrecognized subsequent event that is disclosed, Statement 105 requires governments to include the following information in the notes to the financial statements:

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

Disclosures must be presented by reporting unit and may be aggregated where appropriate to avoid unnecessary duplication.

Governments are now also required to disclose the date through which the subsequent events were evaluated in the notes to the financial statements.

Crowe observation: Many governments already disclose significant subsequent events narratively. In some cases, the effects of a nonrecognized event may be qualitative rather than numerical, and Statement 105 permits disclosure of nonnumerical effects where appropriate. The requirement to address magnitude or explain why it cannot yet be determined enhances transparency while alleviating potential concerns by preparers when this information is not available.

What do entities need to consider?

Governments should begin evaluating the following:

• How to determine the “available to be issued” date under their internal approval structure
• Processes for identifying subsequent events across departments and reporting units
• Disclosure templates and controls to support the new requirements

Governments with large reporting entities or complex approval processes may experience the most significant process impacts, particularly in coordinating evaluation dates and reporting unit-level disclosures.

When does Statement 105 take effect?

The guidance is effective for fiscal years beginning after June 15, 2026, and all reporting periods thereafter, with early adoption encouraged. This disclosure is to be applied prospectively at transition; that is, if comparative financial statements are presented, the reporting requirements of Statement 105 are required for only the current period.

GASB materials reprinted with permission. Copyright 2026 by Financial Accounting Foundation, Norwalk, Connecticut. Copyright 1974-1980 by American Institute of Certified Public Accountants. Copyright 1976-1984 by Government Finance Officers Association.