GASB Statement No. 105: What State and Local Governments Need to Know About Subsequent Events

What is GASB Statement No. 105

State and local governments have applied inconsistent approaches to identifying and disclosing subsequent events. In December 2025, the Governmental Accounting Standards Board (GASB) issued Statement No. 105, Subsequent Events. The statement establishes consistency and clarity in how governments identify, evaluate, and disclose subsequent events. The new statement applies to all state and local governments reporting under GASB and is effective for fiscal years beginning after June 15, 2026, and all reporting periods thereafter. Early adoption is encouraged.

Key Takeaways

• GASB Statement No. 105 replaces the subsequent-events guidance in GASB Statement No. 56 and establishes a consistent framework for state and local governments.
• The statement defines the subsequent events time frame as the period between the financial statement date and the date the financial statements are available to be issued.
• The statement classifies events as recognized or non-recognized, determining whether adjustment or disclosure is required.
• Statement No. 105 establishes a consistent evaluation period and clear disclosure requirements.

Why GASB Replaced Statement No. 56

GASB Statement No. 56 incorporated auditing-based subsequent-event concepts into governmental accounting, leading to inconsistent application around timing and responsibility. GASB Statement No. 105 replaces that approach with a well-defined accounting framework, establishing a consistent evaluation period and clear disclosure requirements to improve comparability and transparency in governmental financial reporting.

Key Definitions

• Subsequent events – transactions or other events that occur after the date of the financial statements but before the date the financial statements are available to be issued
• Subsequent events time frame – the period between the financial statement date and the date the financial statements are available to be issued
• Date financial statements are available to be issued – the date when (1) the financial statements are complete and GAAP‑compliant, and (2) all necessary approvals for issuance have been obtained

Types of Subsequent Events

The statement further clarifies whether subsequent transactions or events should be identified as recognized or non‑recognized in the financial statements.

A subsequent event should be recognized, or recorded in the financial statements, when the event provides additional evidence about conditions that existed as of the financial statement date. Recognition is necessary as the event may affect estimates or amounts reported in the financial statements. For example, a government is the defendant in ongoing litigation, and the court issues a $4 million judgment in favor of the plaintiff after year‑end. While the litigation was previously disclosed and a $2 million contingent liability was recorded, the subsequent judgment directly affects the existing liability. Accordingly, the liability should be adjusted in the financial statements and the contingency disclosure updated.

A subsequent event is non‑recognized when the event relates to conditions that arose after the financial statement date, rather than conditions that existed at year‑end. As a result, the event does not affect balances reported as of the financial statement date. For example, after year‑end, a government enters into a purchase and sale agreement in the amount of $5 million for the acquisition of land. Because the agreement was not executed until after year‑end, the event is considered non‑recognized. Non-recognized subsequent events will still require disclosure if they are material to the financial statements. Examples include but are not limited to the issuance of debt or debt refundings, significant grant awards or funding approvals, major capital asset acquisitions or dispositions, and natural disasters or other events that have a material effect on future financial position or operations.

Disclosure Requirements Under GASB Statement No. 105

GASB Statement No. 105 requires certain disclosures to confirm that financial statement users are appropriately informed of significant events occurring after the financial statement date but before the financial statements are available to be issued.

• Recognized events: Disclosure is generally not required because the financial statements have been adjusted for the event. However, if a recognized subsequent event affects an area of the financial statements that requires disclosure (such as contingencies), the related note disclosure should be updated accordingly.
• Non-recognized events: Disclosure is required if the event is material to the financial statements. If material, the disclosure should include the nature of the subsequent event and an estimate of the financial impact, or a statement that the financial impact cannot be estimated.
• The date through which subsequent events were evaluated is required to be disclosed, regardless of whether subsequent events occurred.

What GASB No. 105 Means for State and Local Governments

GASB believes the implementation effort on state and local governments will be minimal, as governments generally already possess the information necessary for disclosure, and some governments may currently be providing similar disclosures.

GASB 105’s impact on subsequent event recognition and disclosure is important as it confirms that financial statements are adjusted for events that provide additional evidence about conditions existing at the financial statement date, while appropriately disclosing material events arising after year-end that may affect a government’s future financial position or operations.

How EisnerAmper Can Help

Proper implementation of GASB Statement No. 105 strengthens the usefulness and integrity of governmental financial statements by clarifying how and when subsequent events affect recognition and disclosure. Is your organization ready to update its policies and processes ahead of the June 2026 effective date? EisnerAmper's Government Services team has extensive experience helping state and local governments navigate new accounting standards. Contact us below to get started.