By Christopher Tyhurst, CPA — Principal — REDW Advisors & CPAs
GASB Statement No. 103 is reshaping how governmental financial statements are prepared and presented — and for Tribal governments, state governments, and local governments with fiscal years beginning after June 15, 2025, implementation is no longer a future concern. It’s a now concern. Christopher Tyhurst, CPA and Principal at REDW Advisors & CPAs, works closely with Tribal governments and state and local governments on accounting and financial reporting compliance. This article breaks down what GASB 103 requires, which entities are affected first, and what finance teams and auditors should be doing to prepare.
GASB Statement No. 103, Financial Reporting Model Improvements, updates several core elements of governmental financial reporting. For Tribal governments and state and local governments, now is the time to prepare—especially for entities with fiscal year ends of June 30, 2026 and September 30, 2026, which will be among the first to implement the standard.
Effective Date
GASB 103 is effective for fiscal years beginning after June 15, 2025. As a result, governments with the following fiscal year ends will be among the first required to adopt the standard:
- June 30, 2026
- September 30, 2026
Implementation is no longer a future concern—it’s a now concern.
What Does GASB 103 Change?
GASB 103 is intended to improve the usefulness of governmental financial statements by refining presentation and disclosure requirements in several areas:
 | MD&A Management’s Discussion and Analysis |
 | Unusual Items Unusual or infrequent items |
 | Proprietary Funds Proprietary fund statement presentation |
 | Budgetary Budgetary comparison information |
 | Component Units Major component unit disclosures |
Refocused MD&A
The standard revises MD&A to encourage a shorter, more decision-useful analysis. Governments should focus on:
- significant changes from the prior year,
- important balances and results of operations,
- major capital asset and long-term debt activity, and
- currently known facts or conditions expected to have a significant future effect.
For many governments, this will mean moving away from repetitive, template-driven MD&A language.
Proprietary Fund Reporting
One of the most significant updates affects proprietary funds. GASB 103 clarifies how governments should distinguish between:
- operating revenues and expenses, and
- nonoperating revenues and expenses.
In general, operating revenues and expenses are those associated with the fund’s principal ongoing operations. Items such as investment income, many subsidies, and certain noncapital financing activities will generally be reported as nonoperating.
This change may be especially important for governments with utilities, housing programs, health operations, gaming enterprises, broadband systems, or other business-type activities.
New Proprietary Fund Subtotals
The statement also requires new subtotals in the proprietary fund statement of revenues, expenses, and changes in fund net position. These revisions are intended to improve consistency and make it easier for users to evaluate operating results.
Budgetary Comparison & Component Units
Enhanced Budgetary Comparison Information
GASB 103 updates budgetary comparison reporting by requiring disclosure of:
- variances between original and final budget, and
- variances between final budget and actual results,
along with explanations of significant differences.
Governments that frequently amend budgets should review whether their current processes capture this information clearly and consistently.
Revised Major Component Unit Disclosures
The standard also updates disclosure requirements for major component units to provide users with a clearer understanding of their significance within the reporting entity.
For Tribal governments and other governments with legally separate affiliated entities, this area may require early review.
Separate Presentation of Unusual or Infrequent Items
GASB 103 requires unusual or infrequent items to be presented separately in the financial statements and disclosed as appropriate in the notes. This change is intended to make significant nonroutine events more visible to users of the financial statements.
Why Does GASB 103 Matter for Your Government?
Here’s the honest reality: GASB 103 won’t upend your accounting fundamentals — but it will change how you present and explain financial information, and that distinction matters more than it might sound. Implementation may require governments to revisit:
- MD&A drafting,
- proprietary fund classifications,
- chart of accounts and report mapping,
- budget-to-actual reporting, and
- component unit disclosures.
For Tribal governments in particular, the standard may have a noticeable impact where enterprise activities, grants, transfers, and affiliated entities are significant.
How Should You Prepare for GASB 103?
Governments with June 30, 2026 and September 30, 2026 year ends should begin planning now. Practical next steps include:
- reviewing proprietary fund revenue and expense classifications,
- updating MD&A templates,
- evaluating budget variance reporting,
- identifying unusual or infrequent transactions during the year, and
- discussing implementation with auditors and advisors in advance of year-end.
Final Thoughts
GASB 103 will first affect governments with fiscal years beginning after June 15, 2025, including many June 30, 2026 and September 30, 2026 year-end entities. Early preparation can help Tribal governments and state and local governments avoid year-end reporting issues and implement the new requirements more efficiently. REDW’s governmental accounting team has deep experience helping Tribal governments and state and local governments navigate new GASB standards — from initial impact assessment through year-end implementation.
If your organization is approaching a June 30, 2026 or September 30, 2026 fiscal year end, now is the time to start that conversation. Reach out to our team to assess your GASB 103 readiness before year-end pressure sets in.
