Now is the time for community colleges and similar public organizations to move from awareness to implementation. GASB Statement No. 103 is effective for fiscal years beginning after June 15, 2025.
For organizations with a July 1, 2025 through June 30, 2026 fiscal year, the new model applies to the financial statements for the year ending June 30, 2026. That means implementation work should already be underway and organizations should not wait until the audit is complete to address these changes.
The first step is ownership. A designated individual within the finance function should be responsible for coordinating the full implementation effort, including financial statement mapping, narrative updates, audit coordination and review of supporting schedules. This should not be treated as a narrow year-end drafting exercise but as a broader reporting project that may involve multiple stakeholders.
The second step is a detailed review of the general ledger. Organizations should identify revenue and expense accounts that may change classification under the revised operating and nonoperating definitions and identify funding streams that meet the definition of a subsidy. This analysis should include appropriations, grants, support payments, fee offsets, operational transfers and other recurring public support that helps keep charges below cost. A practical approach is to develop a crosswalk that shows the current presentation, proposed GASB 103 presentation and rationale for each change.
The third step is a dry run. Before drafting the annual financial statements, organizations should prepare a mock SRECNP using prior-year balances or current year-to-date activity. This exercise helps teams see how totals and subtotals change and where additional explanation will be needed. Classification questions are far easier to resolve during a dry run than during final statement preparation. At this stage, it is also strongly recommended to share results with auditors so they can begin evaluating the changes early.
The fourth step is to begin the MD&A early. GASB 103 emphasizes a clearer and more structured explanation of why financial results changed. Finance teams should outline the revised MD&A sections in advance, identify the key financial storylines for the year and ensure the narrative aligns with the updated statement presentation. If the statements change but the narrative does not, the final report may feel disconnected or confusing to readers.
The fifth step is to review the broader reporting package. Organizations should assess whether budgetary comparison schedules, Required Supplementary Information (RSI), major component unit presentation, unusual or infrequent item disclosures and statistical section schedules need updating to align with the new reporting model. While much of the effort centers on the SRECNP, related sections often require conforming changes.
The final step is communication. Boards, presidents, cabinet members and audit committees should be informed in advance that presentation changes may affect year-over-year comparisons. Shifts in subtotals or classifications do not necessarily reflect changes in underlying operations. Leadership should understand these reporting impacts before statements are issued, and organizations should plan for additional time during audit committee review to walk through the changes.
From a timing perspective, organizations should aim to complete account mapping and the dry run before year-end close, draft the revised MD&A during the close process and finalize related notes, RSI and statistical section updates before the audit is substantially complete. The smoothest implementations will come from treating GASB 103 as a current reporting initiative rather than a last-minute disclosure adjustment.
Read our first article about GASB 103 here.
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