The Governmental Accounting Standards Board (GASB) issued new accounting and financial reporting guidance for subscription-based information technology arrangements (SBITAs), which have become increasingly common among state and local governments in recent years.
Statement No. 96, Subscription-Based Information Technology Arrangements, is based on the standards established in Statement No. 87, Leases. The GASB in Statement 96:
Although existing GASB literature addresses computer software that is internally developed or commercially purchased through perpetual licensing agreements, stakeholders have raised questions regarding cloud computing and other subscription-based forms of software applications and data storage. The new guidance should remedy existing inconsistencies in accounting and financial reporting for SBITAs.
The Statement is effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Early application is encouraged. In order to give state and local governments and other stakeholders additional time to deal with circumstances arising from the COVID-19 pandemic, this date is one year later than what the Board proposed in the Exposure Draft.
Statement 96 is available on the GASB website. The GASB also provides a variety of COVID-19-related resources for stakeholders, including an emergency toolbox.
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