GASB Advances Key Standards and Clarifies Guidance in October 2025 Meetings

The Governmental Accounting Standards Board (GASB) met on October 21–22, 2025, to deliberate six major topics — making several tentative decisions and clarifying technical guidance to improve governmental financial reporting.

Subsequent Events

The Board reviewed a pre-ballot draft of a final Statement on subsequent events, focusing on clarifying edits and the balance of benefits versus implementation costs. The Board discussed concerns about the footnote to ¶9, emphasizing that only regularly scheduled debt service payments are excluded from debt-related transactions, while other long-term financing activities (such as leases and public-private partnerships) may still qualify as non-recognized events. The Board also clarified that changes in the composition of legally separate entities refer to changes in the financial reporting entity, not internal reorganizations. Staff were instructed to prepare a ballot draft, signaling that this standard is approaching completion.

Updated Implementation Guidance

The Board considered six new Q&As and an amendment for GASB 103, focusing on the definition and classification of subsidies. Notably, scholarship donations and certain research grants are now clarified as subsidies if there is no reciprocal benefit to the donor or grantor. The guidance distinguishes between exchange transactions and subsidies, with practical examples recommended for clarity. The Board also addressed passenger facility charges, housing vouchers, and supplemental Medicaid payments, providing nuanced rationale for their classification. Capital versus noncapital subsidies are now defined by provider intent with debt service-limited subsidies classified as capital. The Board supported moving forward with a pre-ballot draft of an Exposure Draft (ED) for a new Implementation Guide.

Going Concern Uncertainties (GCU)

The Board decided to require separate disclosures for poor financial condition and uncertainty about continued existence, reflecting the distinct circumstances governments may face. The scope will not expand to include liquidation basis accounting, as true governmental liquidation events are rare and users need information on both financial stress and dissolution.

Revenue and Expense Recognition (RER)

Deliberations included material rights and variable consideration. The Board clarified that performance obligations should not encompass material rights for revenue or expense transactions, preventing inappropriate deferral of recognition. Incentives are to be treated as variable consideration reducing the total binding arrangement amount, applicable to both Category A and B transactions. Measurement proposals will not address share-based consideration, vouchers, or coupons.

Digital Financial Reporting

The Board explored taxonomy modeling for digital reporting, focusing on dual-model approaches for Statement 100 and fund balances. Discussions emphasized balancing GAAP compliance with flexibility for government-specific reporting and the need for user outreach to determine the appropriate level of detail.

Infrastructure Assets

The Board clarified the definition of networks of infrastructure assets, focusing on the type of service provided rather than asset type. RSI requirements were refined as follows: governments using historical cost are not required to present a 10-year schedule of maintenance expenses, but those using the modified approach must present the three most recent condition assessments and a 10-year comparison of estimated and actual preservation expenses.

Transition guidance favors prospective application for all assets in service after the effective date, with retroactive application deemed too burdensome. The effective date for new requirements is proposed for fiscal years beginning after June 15, 2028, with earlier application encouraged.

Technical Plan

The Board tentatively decided to split the RER EDs (one each for Categories A and B) to facilitate targeted stakeholder feedback, with plans to revisit this approach as the project progresses.

Impact and Benefits for Governments

These clarifications and decisions strengthen transparency, consistency, and usability in governmental financial reporting. State and local governments will benefit from clearer guidance on subsequent events, subsidies, and infrastructure assets, simplifying compliance and improving disclosure quality. Financial statement users — including citizens, oversight bodies, and policymakers — will gain access to more reliable, comparable, and accessible information. Enhanced digital reporting initiatives promise greater usability and public engagement. Collectively, these updates support informed decision-making and reinforce trust in governmental financial accountability.

All decisions summarized here are tentative; final standards may differ. Governments should await official issuance before implementing changes.

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