Scope & Methodology: This article is based on publicly available sources including GASB official guidance, CPA firm analyses, and federal accounting standards. The research is not exhaustive — readers should conduct their own independent research and consult qualified professionals before relying on this analysis for policy or compliance decisions.

GASB 105: Subsequent Events Reporting for Government Entities

Executive Overview

As of June 2024, the Governmental Accounting Standards Board (GASB) has not issued a Statement No. 105 on Subsequent Events. The information in this article is hypothetical and intended for illustrative purposes only.

What Are Subsequent Events?

For illustrative purposes, this article assumes a hypothetical GASB 105 that would define subsequent events as 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. This window—often called the "disclosure date" or "available to be issued" date—requires evaluation in determining which events must be assessed for reporting under GASB standards.

The hypothetical framework distinguishes between two types of subsequent events:

Recognized events are those that provide additional evidence about conditions that existed at the financial statement date and directly affect the measurement of account balances reported in the financial statements. These events should result in adjustments to the financial statements themselves.

Nonrecognized events are those that provide evidence about conditions that did not exist at the financial statement date. These events are not adjusted in the financial statements but may require note disclosure if they meet the materiality threshold under GASB standards.

Key Disclosure Requirements

While some accounting standards encourage disclosure of the evaluation period for subsequent events, there is currently no GASB standard that explicitly requires governments to disclose the date through which subsequent events have been evaluated.

For nonrecognized events with effects, governments typically include:

A description of the event and its nature
An estimate of the financial effect, or if an estimate cannot be made, the reason why
Information about whether the event was evaluated and determined to be nonrecognized, or not evaluated prior to financial statement issuance

In this hypothetical scenario, the standard does not define "significant" precisely, intentionally allowing judgment in application. Governments may wish to consider the magnitude and nature of the event, the expectations of financial statement users, and the government's specific circumstances.

Categories of Subsequent Events

Governments may encounter several types of subsequent events:

Debt-related events — A bond issuance, refinancing, or restructuring that occurs after year-end but was planned during the reporting period may require disclosure. Similarly, a downgrade in credit rating may represent a subsequent event.

Litigation settlements — Settlements of disputes that originated before year-end but were settled after the statement date should be evaluated for recognition or disclosure.

Disasters and emergencies — Natural disasters, major infrastructure failures, or public health emergencies occurring after the statement date but before issuance may affect the government's financial condition and should be disclosed.

Personnel or leadership changes — Leadership transitions, sudden departures of key financial personnel, or reorganizations that affect operations should be evaluated for disclosure under materiality guidelines in GASB standards.

Grant or funding changes — Notification of loss of anticipated grant funding or sudden reductions in state or federal appropriations after the statement date may be enough to disclose.

Discovery of fraud or errors — Identification of material misstatements, fraud schemes, or control breakdowns after year-end may require both adjustment and disclosure.

Recognition vs. Disclosure: Practical Examples

Example 1: Recognized Event A government's largest taxpayer files for bankruptcy on July 15 (after the June 30 year-end). During fieldwork, the finance team discovers that this taxpayer had missed loan payments and faced covenant violations throughout the fiscal year. The auditor concludes that a loss reserve or write-down of expected revenues meets the recognition criteria under GASB standards as of June 30. The event provides additional evidence of a condition that existed at year-end and requires an adjustment to the financial statements.

Example 2: Nonrecognized Event with Disclosure On August 10, a major employer announces a facility closure effective the following year, with 500+ job losses expected. The employer was in stable financial condition at June 30, and the decision to close was made after year-end. Under GASB standards, this nonrecognized event would require disclosure in the notes, describing the event, estimated job losses, expected tax revenue impacts, and the timing of the closure.

Example 3: Nonrecognized Event Without Disclosure A routine equipment purchase order is placed on August 1 for a vehicle needed for next fiscal year's operations. While a transaction, this does not affect the financial statements at June 30 and would not require disclosure under GASB standards.

Implementation Timeline and Transition

There is currently no GASB standard on subsequent events with an effective date or recommendation for early application.

Any implementation guidance discussed here is hypothetical and for illustrative purposes only. In such a scenario, a standard might apply prospectively, meaning governments would not need to restate prior-year financial statements or apply the guidance retroactively. The first year of implementation would require structured planning aligned with the effective date, such as:

Define the "available to be issued" date — Finance directors may establish a formal cutoff date, typically the date the CFO signs the financial statements or the date the governing body approves them.
Document evaluation procedures — One approach is to document evaluation procedures such as a checklist or procedure memo identifying which events or circumstances will be evaluated as part of the subsequent events review.
Train finance and audit staff — Organizations may benefit from training both internal finance teams and external auditors on the framework and the government's evaluation procedures.
Coordinate with auditors — The auditor has responsibility for identifying subsequent events through procedures performed after the statement date, so coordination on the government's "available to be issued" date is useful.

Relationship to Other Standards

There is currently no GASB 105, so there is no standard to supersede or interact with other accounting standards. For example, GASB 87 (Leases) continues to govern the accounting for lease modifications that occur after the statement date.

Common Questions and Answers

Q: Do we have to disclose every subsequent event? A: No. Only events that meet materiality thresholds typically require disclosure. In practice, judgment is necessary, and finance teams should consider user needs and the event's magnitude consistent with GASB standards.

Q: What if we can't estimate the financial effect? A: In current practice, disclosure of the event without a specific estimate is generally acceptable, as long as you explain why an estimate cannot be made. This is useful for litigation, disasters, or other events where the full impact remains uncertain.

Q: Does the auditor have responsibility for finding subsequent events? A: Yes, the external auditor performs procedures to identify subsequent events through the date the auditor's report is signed. However, the government's initial responsibility is to establish evaluation procedures and identify events. The auditor then tests whether management has appropriately identified and evaluated events.

Q: Can we change our "available to be issued" date year to year? A: Consistency is important, but the date should reflect the actual process used in the government. If the governing board approves financial statements on different dates in different years, the disclosure date may vary, but changes should be documented and disclosed.

Implementation Considerations for Finance Teams

Government finance officers may wish to review their current subsequent events procedures and consider best practices for disclosure and evaluation, even in the absence of a specific GASB standard. Potential steps include:

Review current subsequent events procedures — One step is to assess whether current practice aligns with disclosure expectations or if modifications may be beneficial.
Establish audit committee communication — Audit committees may benefit from communication on expectations for disclosure and subsequent events evaluation.
Coordinate with external auditors — Coordination with auditors on testing procedures and alignment on the "available to be issued" date may be useful.
Update financial statement preparation timeline — Organizations may wish to evaluate whether current timelines allow adequate time for subsequent events evaluation before statements are issued.
Plan disclosure revisions — One approach is to identify what disclosures the government will include in footnotes regarding the evaluation period and any subsequent events.

Conclusion

While there is currently no GASB 105, governments should remain attentive to developments in accounting standards and continue to apply professional judgment and best practices in subsequent events reporting. Reviewing and refining procedures can help ensure transparency and consistency in financial statement disclosures.

This content was prepared with AI-assisted research using exclusively publicly available sources. No confidential or proprietary data from any client engagement was used. It is provided for informational purposes only and does not constitute legal, financial, or investment advice. All data should be independently verified before use in any official capacity. © 2026 DWU Consulting. All rights reserved.