Subsequent Events—Reexamination of Statement 56

Project Description: The objective of this project is to improve the accounting and financial reporting for subsequent events. The project will reexamine existing requirements related to subsequent events in Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards, to address issues related to (1) confusion about and challenges associated with applying the existing standards, (2) inconsistency in practice in the information provided about subsequent events, and (3) the usefulness of the information provided about subsequent events.


Subsequent Events—Project Plan

Background: The guidance in Statement 56 related to subsequent events, although effective upon issuance in March 2009, dates back to the Association of International Certified Professional Accountants’ (AICPA) audit literature from 1972. The Board incorporated the guidance from the AICPA literature into Statement 56 essentially as is, and therefore, that guidance has not been evaluated for appropriateness to state and local governments, effectiveness, consistency with the conceptual framework, or the usefulness of the information that results from its application.

Pre-agenda research indicated challenges with (1) identifying subsequent events and (2) distinguishing between recognized and nonrecognized subsequent events. Pre-agenda research identified the misreporting of subsequent events in two manners: (1) reporting events as subsequent events when they do not constitute such events or (2) omission of reporting a subsequent event when it should be reported. Furthermore, the pre-agenda research indicated diversity in practice with regard to the types of subsequent events disclosed and the content of disclosures about subsequent events. Subsequent events are broadly applicable across governments, and users generally find information about subsequent events to be valuable to their assessments of governments’ financial condition, credit quality, and compliance with rules and regulations.

Accounting and Financial Reporting Issues: The following issues would be considered:

  1. Whether and, if so, how should the existing definitions of recognized subsequent events and nonrecognized subsequent events be modified?
  2. What information should be provided about subsequent events? Which communication method is best suited for this information?
  3. Interaction between any requirements resulting from this project and other GASB standards related to transactions or other events that occur subsequent to the date of the financial statements.
Project History:
  • Pre-agenda research approved: December 2021
  • Consultative group appointed? No
  • Research results reported to the Board: July 2023
  • Added to the current technical agenda: August 2023
  • Task force established? No
Current Developments:

Work Plan:

Board Meetings Topics to Be Considered
October 2023–March 2024 Initial deliberations, including definitions of subsequent events, reporting requirements in notes to financial statements and RSI, and relationships with other GASB standards
April 2024–June 2024 Additional user outreach regarding note disclosures
July 2024 Present results of user outreach and consider effects on Board tentative decisions
August 2024 Consider other issues; effective date and transition
September/October 2024 Review first draft of standards section of an Exposure Draft of a proposed Statement; cost benefit considerations
November 2024 Review preballot draft of an Exposure Draft of a proposed Statement
December 2024 Review ballot draft of an Exposure Draft of a proposed Statement and consider for approval
January–March 2025 Comment period
April–September 2025 Redeliberations based on respondent feedback
October 2025 Review preballot draft of a final Statement
December 2025 Review ballot draft of a final Statement and consider for approval

Subsequent Events—Recent Minutes

Minutes of Meetings, July 17, 2023

The staff presented the results of the subsequent events pre-agenda research. No Board decisions were made.

Subsequent Events—Tentative Decisions to Date