Key Takeaways
- GASB 105 redefines the subsequent events window. The “subsequent events time frame” now runs through the date financial statements are available to be issued — not the old, undefined “issuance date” — closing a gap that caused inconsistent practice across governments.
- Two categories, two treatments. Recognized events adjust the financial statements themselves; nonrecognized events get disclosed in the notes, not baked into year-end numbers.
- A new disclosure is now mandatory for everyone. Regardless of whether anything happened after year-end, governments must disclose the exact date through which subsequent events were evaluated.
- Professional judgment still carries the weight. GASB 105 tightens definitions, but determining what counts as a recognized or nonrecognized event still requires facts-and-circumstances analysis.
- The clock starts for fiscal years beginning after June 15, 2026 — early adoption is encouraged, and Ohio governments should start evaluating their close and disclosure processes now.
GASB 105: What Changes for Your Next Audit
For nearly 15 years, Ohio’s governments have relied on Statement 56 to handle subsequent events — the transactions and developments that surface after year-end but before the financial statements go out the door. It worked, mostly. But it left real gaps: an undefined “issuance date,” fuzzy criteria for what actually belonged in the notes, and just enough ambiguity to create inconsistent practice from one government to the next.
GASB Statement No. 105, issued in December 2025, closes those gaps. If you’re a finance director, auditor, or school treasurer preparing for your next audit cycle, here’s what’s different — and what it means for your close process.
A Clearer Definition of When the Clock Stops
Under the old guidance, subsequent events ran through the “issuance date” — a term GASB never formally defined. In practice, that created confusion whenever there was a lag between the audit report date and when the audit was filed..
GASB 105 fixes this by replacing “issuance date” with a defined milestone: the date the financial statements are available to be issued. That’s the point at which (1) the statements are complete in a form and format that complies with GAAP, and (2) all approvals necessary for issuance have been obtained. In most cases, that lines up with your audit report date but not always, and now there’s a consistent standard to apply either way.
There’s a new disclosure requirement attached to this, too: every government must state the date through which subsequent events were evaluated, whether or not anything happened. It’s a small addition, but it gives financial statement users clarity on exactly what time frame was considered.
Recognized vs. Nonrecognized: Knowing Which Bucket You’re In
GASB 105 sharpens the line between the two types of subsequent events, and getting this distinction right determines how and where an event shows up in your financial statements.
provide evidence of conditions that already existed at year-end — but identifying them, and determining how to adjust for them, relies heavily on professional judgment. Think of a lawsuit that was pending at your financial statement date and gets resolved a few months later during the audit. If a government recorded a $250,000 estimated settlement liability at year-end based on legal counsel’s judgment, and the actual settlement comes in at $300,000 before the audit report is finalized, that $50,000 difference gets recorded through a journal entry because the underlying condition (the lawsuit) existed all along. The professional judgment used to arrive at the original estimate is simply updated with the now-known outcome. The same is true when a receivable from a major customer looks shakier after that customer ceases operations post year-end: the condition (the receivable) existed at year-end, but it takes professional judgment to assess collectability and determine whether an allowance adjustment is warranted, and by how much. In both cases, GASB 105 relies on the preparer’s judgment to connect the subsequent development back to the condition that existed at the financial statement date.
Nonrecognized events are different animals entirely. New developments that didn’t exist at year-end but are significant enough that users need to know about them. GASB 105 explicitly calls out three categories: debt-related transactions, government combinations or disposals of operations, and changes to the legally separate entities that make up the reporting entity. A bond issuance finalized in March for a government with a December year-end is a textbook example. It doesn’t get recorded as a year-end liability, but it absolutely belongs in a note disclosure describing the issuance date, amount, and impact. Beyond those three named categories, GASB 105 also leaves room for professional judgment: if a subsequent event is significant enough that a user would need it to make decisions or assess accountability, it should be disclosed even if it doesn’t fit neatly into one of the explicit buckets.
For nonrecognized events, the disclosure itself now has teeth: a description of the event and its effect, plus an estimate of the dollar impact. Or, if that’s not possible, an explanation of why an estimate can’t be made.
Why This Matters Beyond Compliance
It’s tempting to file this under “technical accounting update and move on.” But the practical value here is real. Clearer definitions mean less second-guessing during your audit. Consistent disclosure requirements mean your financial statements are more comparable to peer governments, which matters when you’re explaining variances to a council, board, or bond rating agency. And a defined evaluation date gives your stakeholders confidence that nothing fell through the cracks between year-end and issuance.
Getting Ready
GASB 105 is effective for fiscal years beginning after June 15, 2026, with early application encouraged. For most Ohio governments on a calendar or June 30 fiscal year, that means your FY 2027 audit is the first one under the new rules. A few things worth doing now:
- Review your close checklist to make sure it captures the “available to be issued” date, not just your historical issuance date.
- Talk through recent subsequent events with your audit team using the new recognized/nonrecognized framework, so there are no surprises when the standard takes effect.
- Update your note disclosure templates to include the required evaluation date language for every reporting period, even years with no significant subsequent events.
Rea’s Government Services team works with municipalities, counties, schools, and special-purpose governments across Ohio every audit season, and we’re already building GASB 105 into our planning conversations with clients. If you want to talk through how this affects your specific reporting calendar, we’re here to help.
Ready to talk through your next audit cycle? Connect with Rea’s Government Services team.
About the Author
Madison Zeigler is a Senior Associate on Rea’s Government Services team, where she works with municipalities, counties, schools, and other public entities across Ohio to navigate evolving GASB standards and financial reporting requirements. Madison stays close to new pronouncements as they’re issued, helping translate technical accounting guidance into practical steps governments can act on before their next audit.
