Closing the fiscal year does not mean every reporting responsibility is finished. GASB Statement No. 105 clarifies how municipalities evaluate events occurring after year-end but before financial statements are available to be issued. Finance directors should review their reporting calendars, approval procedures, departmental communication and documentation practices before the standard takes effect.

What GASB 105 Changes About Year-End Reporting

For municipal finance teams, year-end closing follows a familiar routine. Reconcile accounts, review outstanding transactions, prepare financial statements and work with auditors.

But what happens when something significant occurs after the fiscal year ends?

GASB Statement No. 105, Subsequent Events, clarifies how governments identify, evaluate and report these events.

The standard is effective for fiscal years beginning after June 15, 2026, with earlier application encouraged. It is applied prospectively, meaning governments apply the requirements going forward rather than restating prior periods.

For municipalities operating on a July 1 to June 30 fiscal year, the requirements first apply to the fiscal year ending June 30, 2027, unless adopted early.

A key clarification concerns the reporting evaluation period.

Under GASB 105, subsequent events are evaluated through the date financial statements are available to be issued. That means:

• Financial statements are complete in a format consistent with generally accepted accounting principles (GAAP).
• All approvals necessary for issuance have been obtained.

That date may differ from the audit report date or public release date.

Municipalities should identify which approvals establish that their financial statements are available to be issued.

Why Communication Matters After the Books Close

Finance departments cannot evaluate events they do not know occurred.

Consider a municipality that closes its fiscal year in June. During August, the city issues new debt or receives important information about an outstanding receivable.

Depending on the circumstances, that information may affect financial statement amounts or require disclosure.

GASB 105 distinguishes between two types of subsequent events:

• Recognized events: Provide additional evidence about conditions existing at the financial statement date and affect the measurement of reported accounting estimates.
• Nonrecognized events: Concern conditions arising after the financial statement date. Significant events in specified categories may require disclosure.

These categories include certain debt-related transactions, government combinations or disposals of operations, and changes in the financial reporting entity.

For reportable nonrecognized events, governments disclose the nature of the event and its financial effect, provide an estimate or explain why an estimate cannot be made.

This makes communication between finance, administration and other departments especially valuable.

Department leaders should know when to report significant financial developments, even after their year-end responsibilities appear complete.

A Practical GASB 105 Readiness Checklist

Municipalities may not need an entirely new closing process. They may need clearer responsibilities and better documentation.

Start with these five steps:

1. Review the close calendar. Identify financial statement completion dates and required approvals.
2. Assign responsibility. Determine who collects and evaluates subsequent event information.
3. Establish communication checkpoints. Ask department leaders to report significant developments during the evaluation period.
4. Maintain an evaluation record. Document events reviewed, accounting conclusions, supporting information and the approvals establishing when statements are available to be issued.
5. Coordinate with auditors. Confirm reporting procedures, disclosure preparation and the documented evaluation date.

GASB 105 also requires disclosure of the date through which subsequent events were evaluated, even when no reportable events are identified.

Where SmartFusion Fits

Accurate General Ledger records and accessible financial information provide a foundation for year-end reporting. SmartFusion's Fund Ledger and financial reporting capabilities can help municipal finance teams review accounting information and prepare supporting records. Identifying subsequent events, evaluating their accounting treatment and determining required disclosures remain the responsibility of municipal management.

A well-managed close is about more than meeting deadlines. It is about knowing that significant financial information has been considered before the statements are issued.

Review your procedures now, clarify departmental responsibilities and give your finance team the information needed to report with confidence.

References

Governmental Accounting Standards Board (GASB)

Statement No. 105: Subsequent Events (December 2025)

Read the official GASB Statement No. 105 (PDF)

Relevant sections include:

• Paragraphs 4–5: Subsequent events evaluation period, financial statement availability and required disclosure of the evaluation date.
• Paragraphs 7–8: Recognized subsequent events and their effect on accounting estimates.
• Paragraphs 9–12: Nonrecognized subsequent events, qualifying categories and financial statement disclosures.
• Paragraph 13: Effective date, prospective application and early implementation.

For additional information about governmental accounting standards, visit the Governmental Accounting Standards Board.