In December 2025, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 105, Subsequent Events, which updates and replaces existing guidance previously incorporated from AICPA auditing standards.
During pre-agenda research, the GASB observed a diversity in practice with respect to the information provided in note disclosures about subsequent events. GASB 105 establishes guardrails around the evaluation period and clarifies what should (and shouldn’t) be recognized and disclosed.
The Statement is effective for fiscal years beginning after June 15, 2026, with early application encouraged and should be applied prospectively at transition.
Practical Considerations
GASB 105 introduces several practical changes that governments will need to incorporate into their financial reporting processes. Because the Statement defines the subsequent events evaluation period as ending on the date the financial statements are available to be issued, that is, when the statements are complete in a GAAP compliant form and the approvals necessary for issuance have been obtained, governments may need to revisit internal approval workflows to clearly identify when that date occurs, which may or may not coincide with the audit report date.
The requirement to evaluate subsequent events through that date also reinforces the need to embed related procedures into the normal financial close process, rather than treating them as a step performed only in response to audit inquiries, and to be prepared to support how and when subsequent events were identified and evaluated.
In addition, GASB 105 provides more structured requirements for identifying recognized and nonrecognized events. Recognized events must be incorporated into year end account balances when they provide evidence of conditions existing at the financial statement date, while nonrecognized events must be disclosed when they involve a debt related transaction, a government combination or disposal of operations, changes to legally separate entities within the reporting entity, or other significant events essential to users’ analysis.
Governments should ensure personnel responsible for year end assessments are familiar with these categories and incorporate them into existing subsequent event review procedures.
Finally, governments must include specific disclosures for nonrecognized events, including a description of the event, its effect, and either an estimate of its financial impact or the reason such an estimate cannot be made. These disclosures must correspond to the reporting units presented in the financial statements, which may require more disaggregated note preparation than in prior years. Because GASB 105 is applied prospectively, governments can integrate these requirements into upcoming reporting cycles without revisiting prior periods.
Cherry Bekaert Is Here To Guide You Forward
Need help evaluating how GASB 105 impacts your reporting processes? Cherry Bekaert’s Accounting Advisory professionals assist governments with implementation and compliance requirements under the latest GASB standards.
