Key Takeaways
- Infrastructure reporting is taking shape: GASB tentatively retained both depreciation and the modified approach while advancing expanded, network-level required supplementary information (RSI) for governments using the modified approach.
- The modified approach would continue to require judgment: The Board declined to create an alternative that would allow a government that no longer meets the eligibility requirements to continue reporting infrastructure under that method.
- Financial stress indicators are becoming more concrete: The Board tentatively retained or revised indicators involving recurring operating imbalances, one-time resources used for ongoing costs, short-term borrowing, and certain business-type activity losses.
- Revenue and expense recognition continues to emphasize economic substance: The Board addressed variable consideration and when multiple binding arrangements should be evaluated together as evidence of one transaction.
At its September 15-16, 2026, meetings, the Governmental Accounting Standards Board (GASB) focused on infrastructure reporting, indicators of severe financial stress, and the developing Revenue and Expense Recognition model. Additionally, the Board approved issuance of the final Implementation Guide addressing subsidies.
Unless incorporated into final guidance, the decisions discussed below remain tentative. These developments signal where additional data, documentation, and professional judgment may eventually be required. They are particularly relevant to governments that use the modified approach for infrastructure assets, entities monitoring indicators of severe financial stress, business-type activities with recurring operating losses, and governments with complex or interdependent revenue and expense arrangements.
Infrastructure Reporting Moves Toward a Final Model
Infrastructure accounted for the largest portion of GASB’s September deliberations. The Board tentatively decided not to add further clarification or examples defining infrastructure networks, components, or when a building is integral or ancillary to an infrastructure network.
Stakeholders had raised concerns that governments could define similar infrastructure networks differently, which could limit comparability. Project staff noted that governments established their networks when implementing GASB 34 and that greater prescription could require them to restructure existing accounting groupings. If the final guidance retains this approach, governments will need to support how they identify networks and significant components when substantial judgment is involved.
The Board also tentatively decided that infrastructure assets should continue to be measured using either historical cost net of accumulated depreciation or the modified approach. For modified-approach eligibility, the proposed guidance focuses on whether the government performs and documents the required activities, rather than implying that a particular asset management system must perform them.
Governments would still need an up-to-date inventory, condition assessments, annual estimates of preservation needs, and documentation that assets are being preserved at approximately the established condition level. GASB 34 required supplementary information schedules would be presented by infrastructure network, and estimated-versus-actual preservation information would cover each of the past 10 reporting periods by network. Proposed transition provisions would allow governments to present the years available when a complete 10-year history is not initially available.
Financial Stress Moves Away From a Checklist
GASB continued developing the severe financial stress portion of its Going Concern Uncertainties (GCU) and Severe Financial Stress (SFS) project. The Board tentatively selected financial stress as the consistent term and reinforced that example indicators are intended to support judgment, not operate as automatic thresholds for concluding that a government is nearly insolvent.
The Board tentatively retained recurring periods in which expenses or expenditures exceed revenues as an example indicator. It also revised another indicator to focus on recurring periods when a budget for ongoing costs is balanced using one-time funds.
Other indicators tentatively retained include increased reliance on short-term borrowings to continue operations and, for business-type activities, recurring periods when the subtotal for operating income (loss) and noncapital subsidies is negative. The broader direction emphasizes the persistence, severity, timing, and interaction of conditions rather than the presence of any single indicator.
GASB staff is also indicated that a potentially more useful liquidity indicator would be considered later.
Revenue and Expense Recognition Looks at the Transaction
For variable consideration, such as discounts, rebates, or performance-based amounts, the Board tentatively concluded that the allocation principles already developed provide a sufficient framework and that no additional proposals are necessary.
The more significant development involved multiple binding arrangements. Multiple agreements may need to be considered together when they evidence one economic transaction. Arrangements should be assessed for possible combination when they were entered into at or near the same time among the same parties or when one arrangement references another existing arrangement. Meeting either condition does not automatically require combination.
Subsidy Implementation Guidance Clears Another Hurdle
The Board reviewed a ballot draft of the final Implementation Guide, Financial Reporting Model Improvements-Subsidies, and approved its issuance. This represents continued progress toward implementation guidance associated with the financial reporting model.
Next Steps for Governments
The September deliberations do not establish final accounting requirements. Governments should continue monitoring the infrastructure, severe financial stress, and revenue and expense recognition projects for final guidance, transition provisions, and implementation dates.
For now, governments should:
- Review how infrastructure networks and significant components are currently defined, especially where substantial judgment is involved.
- Assess whether historical preservation and condition information can support a network-level, 10-year required supplementary information presentation.
- Document recurring operating imbalances, dependence on one-time resources, short-term borrowing used to continue operations, and recurring losses within business-type activities, including their severity, timing, and interaction.
- Identify related or interdependent agreements that may represent one economic transaction and document the relationships among them.
Governmental accounting requirements continue to evolve. Connect with Eide Bailly’s government professionals to evaluate the practical implications for your organization and prepare your data, documentation, and processes for potential implementation.
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