Major Progress: GASB Issues Statement No. 105 and Lays Out the 2026 Roadmap

The Governmental Accounting Standards Board (GASB) met December 9-10, 2025, in Norwalk, Connecticut, with all members present. The Board reviewed several key projects, including subsequent events, subsidy guidance, RER, digital financial reporting, and the 2026 technical plan. All decisions remain tentative until finalized.

Subsequent Events

The Board unanimously approved the issuance of Statement No. 105, Subsequent Events, following review of the ballot draft. This standard concludes extensive discussions held throughout 2025 and offers governments clearer direction regarding the identification and reporting of events occurring after the reporting period but before financial statements are issued.

Implementation Guide – Subsidies

The Board advanced work on the proposed Implementation Guide addressing subsidies under Statement 103. Staff presented several important Q&As, including whether taxes imposed by business-type activities should be considered subsidies. Board members agreed these taxes meet the subsidy definition because the payer does not directly receive goods or services in exchange and because the tax reduces fees for others.

Passenger facility charges were also reviewed. Although these are fees charged to passengers, the Board concurred that they qualify as subsidies since they support airport capital improvements and ultimately reduce charges to airlines and concessionaires. Board members acknowledged the potential for misinterpretation and emphasized careful drafting to avoid overextension to unrelated fees.

Revenue and Expense Recognition

A substantial portion of the meeting focused on evolving revenue and expense recognition (RER) guidance. The Board tentatively concluded that characteristics of a nongovernmental resource recipient — such as income level or property ownership — should be treated as qualifying requirements for certain Category B expense transactions. This allows programs like property tax rebates and utility assistance to be recognized in a more conceptually sound manner.

Furthermore, the Board discussed transactions arising from legislative binding arrangements. Recognition should occur when funds have been appropriated and the appropriation period has begun, or when continuing permission to spend exists. Continuing permission was defined as authority that renews automatically without further legislative action.

Board members debated the role of provider intent. Staff clarified that intent is relevant only for Category B transactions without qualifying requirements, but not for those with qualifying requirements, where recognition is driven by recipient characteristics or compliance.

Voluntary Digital Financial Reporting

GASB continued refining its digital reporting taxonomy. Staff explored whether Level 1 note disclosure topics should reflect the Codification structure or observed practice. After reviewing more than 40 commonly occurring disclosure topics from ACFRs, staff recommended an approach grounded in actual governmental reporting patterns. The Board supported developing a Codification mapping crosswalk to aid consistency and transparency.

GASB Technical Plan

The Board approved the technical plan for the first third of 2026. Although no new standard-setting projects were introduced, important updates were shared. Staff highlighted the progress of the Statement 75 Post-Implementation Review (PIR). Preparers generally found OPEB reporting similar to or easier than pension reporting, though deferred inflows and outflows of resources remain challenging. The Board may consider future research on the cost-benefit of deferred items.

The going concern project timeline was extended to align with AICPA auditing standards, an important step to avoid conflicting requirements between accounting and auditing guidance.

Impact and Benefits for Governments

These clarifications and decisions enhance transparency, consistency, and overall usability in governmental financial reporting. State and local governments will benefit from more precise guidance on revenue and expense recognition, digital financial reporting, and subsidies, simplifying compliance and improving the quality of disclosures. Financial statement users — including citizens, oversight bodies, and policymakers — will have access to information that is more reliable, comparable, and easier to interpret. The ongoing development of digital reporting taxonomies promises greater usability and public engagement. Collectively, these updates facilitate informed decision-making and strengthen 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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