GASBS 96, or GASB Statement 96, is a standard issued by the Governmental Accounting Standards Board (GASB) requiring government entities to record a subscription-based liability if a contract enables the entity to control the right-of-use of an IT asset. GASBS 96 applies to financial statements issued by government entities whom are subject to GASB accounting standards, which includes all state and local governments as well as public higher education institutions utilizing a subscription-based IT arrangement, issuing financial statements, and reporting in accordance to GASB frameworks.[1]
The Statement was implemented in May 2020 because of the growing concern over inconsistency in reporting of subscription-based IT arrangements despite their widespread use.[2] GASB 96 does not apply to private entities or non-US government entities; they are typically governed by FASB and IFRS, respectively.
SBITA definition and utilization
editGASB 96 defines SBITAs as "a contract that conveys control of the right to use another party’s (a SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction."[2] The provisions outlined within GASB 96 are not applicable to immaterial items.
The subscription asset should be first measured by finding the summation of the initial subscription liability amount, payments made to the vendor before the subscription term starts, and implementation costs that can be capitalized, less any incentives received from the vendor at or before the subscription term starts. The government should recognize the amortization of the subscription asset as an outflow of resources throughout the subscription term.[3]
In the case of SBITA terminations, the reporting entity should reduce the carrying values of the subscription asset and liability and recognize any resulting gain or loss from the difference.[2]
Implementation
editGASB has implemented the reporting of SBITAs effective for the fiscal years beginning after June 15, 2022 and all subsequent reporting periods.
External links
edit- ^ Manilla, John; Reed, Brandon. "6 things public sector teams should know about GASB 96". Crowe.
{{cite web}}: CS1 maint: url-status (link) - ^ a b c "GASB Statement No. 96" (PDF). Governmental Accounting Standards Board. May 2020. pp. 3–5.
{{cite web}}: CS1 maint: date and year (link) CS1 maint: url-status (link) - ^ "Summary of Statement No. 96". Governmental Accounting Standards Board.
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