Key insights
- Start documenting when your financial statements are available to be issued, because GASB 105 makes that date central to your subsequent event evaluation period.
- Review your year-end close process now so subsequent event review is built into financial reporting steps rather than handled late in the audit process.
- Use the recognized versus nonrecognized event distinction to decide whether an event belongs in the financial statements or should be disclosed in the notes.
- Update your disclosure templates and review procedures before the standard takes effect for fiscal years beginning after June 15, 2026.
Prepare your close process for GASB 105 changes.
Subsequent events can be easy to overlook until financial statements are nearly complete — but under GASB Statement No. 105, state and local governments may need to take a closer look at when their evaluation period ends and what should be disclosed.
The standard is effective for fiscal years beginning after June 15, 2026, with early adoption encouraged, giving governments time to update close procedures, approval documentation, and disclosure checklists.
Who is affected by GASB 105?
GASB 105 applies to state and local governments and other entities preparing financial statements under GASB standards. The update should matter to teams involved in year-end close, financial reporting, audit readiness, governance, debt activity, and disclosure review because it changes the evaluation period and adds more specific disclosure expectations for subsequent events.
Positions most likely to review or apply the GASB 105 updates include:
- Chief financial officers, finance directors, and controllers
- Accounting managers and financial reporting teams
- Treasury, debt management, and capital finance personnel
- Grant, compliance, and program finance leaders
- Internal audit, audit committee, and governance stakeholders
- External auditors and advisors supporting financial statement preparation
Why GASB 105 changes the subsequent event timeframe
A key update in this GASB statement is redefining a subsequent event from previous guidance where the subsequent event timeframe was after the financial statement date but before the financial statements are issued.
GASB 105 defines the timeframe to be “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.” Previous guidance sometimes proved difficult, as administrative procedures for processing and issuing financial statements could take a few days.
GASB 105 further defines available to be issued as “the date at which (1) the financial statements are complete in a form and format that complies with generally accepted accounting principles, and (2) approvals necessary for issuance have been obtained.”
GASB 105 disclosure requirements
Previous guidance lacked specificity for disclosure requirements while GASB 105 provides clarity. First, it’s required to disclose the date through which subsequent events have been evaluated. This is required whether a subsequent event has been identified or not.
Other requirements fall into one of two categories, recognized and nonrecognized events. Here are key characteristics distinguishing the two categories:
| Recognized events | Nonrecognized events |
|---|---|
| Conditions existed at the financial statement date | Event occurred after the financial statement date |
| May affect accounting estimates already reported | May affect users’ analysis, decisions, or accountability assessments |
| Incorporated into the basic financial statements | Disclosed in notes when significant and required |
Recognized events
A recognized event is “a subsequent event that provides evidence of conditions that existed at the financial statement date that inform accounting estimates reported as of the financial statement date.” Some examples are:
Allowance for uncollectable receivables
- During the subsequent event timeframe, it’s discovered an accounts receivable balance won’t be collectable due to deteriorating conditions of a customer that existed at the financial statement date.
Loss contingencies
- A claim filed against an entity where a payout is likely, when the underlying event took place prior to the financial statement date.
Since the conditions for recognized events existed at the financial statement date, the effects of the subsequent event should be incorporated into the basic financial statements.
Nonrecognized events
A nonrecognized event is a subsequent event resulting in a significant effect (favorable or unfavorable) that is recognized or disclosed in the basic financial statements in the reporting period in which the event occurs and is one of the following:
- A debt-related transaction (doesn’t include regularly scheduled debt payments, leases, PPPs, or SBITAs)
- A government combination or a disposal of government operations
- A change to the legally separate entities composing the financial reporting entity
- A transaction or other event that’s of such a nature that the information items (required for disclosure) are essential to a user’s analysis for making decisions or assessing accountability
An example of a nonrecognized event would be a major flood or fire. Since the underlying transaction or event for a nonrecognized event took place after the financial statement date, the effects of the subsequent event should not be incorporated into the basic financial statements yet should be disclosed.
When a nonrecognized subsequent event is identified note disclosures should:
- Include a description of the nonrecognized event and its effect,
- Estimate the amount of the effect for the nonrecognized event, OR the reason why an estimate of the amount cannot be made, and
- Correspond to the reporting units in the financial statements.
GASB 105 effective date and action steps
GASB 105 is effective for fiscal years beginning after June 15, 2026, and all reporting periods thereafter. Earlier application is encouraged. Governments should consider prospective implementation planning now, particularly if year-end close procedures, financial statement approval processes, or disclosure checklists don’t clearly document the date financial statements are available to be issued.
- Update year-end close and financial reporting checklists to reflect the “available to be issued” standard
- Identify who approves financial statements and document when those approvals are obtained
- Build a subsequent event review step into the close process rather than treating it as only an audit follow-up item
- Create a consistent process to classify events as recognized or nonrecognized
- Revise note disclosure templates to include the evaluation date and required information for significant nonrecognized events
- Train finance, governance, and audit stakeholders on the new definitions before the first required reporting period
Strong processes, documentation, and governance practices can help support successful implementation of new standards. Learn more in The Business of Government: Modernization Strategies.
Frequently asked questions about GASB 105
GASB 105 clarifies the subsequent event timeframe by ending the evaluation period when financial statements are available to be issued, rather than focusing on when they are issued.
Yes. GASB 105 requires disclosure of the date through which subsequent events have been evaluated, whether or not a subsequent event has been identified.
The key question is whether the underlying condition existed at the financial statement date. If it did, the event may need to be incorporated into the basic financial statements. If it occurred after the financial statement date and meets the criteria for disclosure, it’s generally treated as nonrecognized.
Disclosures should describe the event and its effect, include an estimate of the amount of the effect or explain why an estimate can’t be made, and correspond to the reporting units in the financial statements.
How CLA can help with GASB 105 implementation
Professional judgement will sometimes be required to determine whether subsequent event conditions existed before or after the financial statement date.
CLA can review your close process, disclosure templates, and approval documentation to provide recommendations to help your team apply GASB 105 consistently and identify where new procedures may be needed.
Contact us
Prepare your close process for GASB 105 changes. Complete the form below to connect with CLA.