The Governmental Accounting Standards Board released a new standard to improve the financial reporting for state and local governments on subsequent events that occur after financial statements are issued.
Processing Content
Statement No. 105, Subsequent Events, aims to provide more consistent reporting of such events. GASB has found from its research that there were differences in practice in how the previous guidance from GASB Statement No. 56 was being applied
The new guidance defines subsequent events as transactions or other events that occur after the date of the financial reporting statements but before the date the financial statements are available to be issued. The definition of subsequent events in the new Statement No. 105 modifies the subsequent events time frame throughout the GASB literature.
Statement No. 105 also makes clearer the various types of subsequent events, when note disclosures are required, and the information that should be included in those note disclosures.
The new requirements take effect for fiscal years starting after June 15, 2026, and all reporting periods after that, but GASB is also encouraging earlier application of the standard.
In an interview earlier this year with Accounting Today, GASB chair Joel Black explained the rationale behind the changes. “We had research that showed an omission rate of about 30% of things that when we look at subsequent time periods and things we know happened, primarily debt issuances that weren’t disclosed that we thought probably should have been,” said Black. “We figured we needed to do something to improve the guidance to get more consistent application of it. That’s really what we’ve proposed here is to try to better describe what we always wanted to get out of that, not necessarily add to the guidance.”
The new standard includes guidance on debt-related events that should be disclosed if they happen after the year ends.
“We don’t want scheduled debt payments, but other new issuances, other major things happening with debt, government combinations or disposals, and then changes within the reporting, the things we kind of prescribe, and then we have the kind of other things that might be essential,” said Black. “Our hope is that we get more consistent application of that guidance.”
