What School Districts Need to Know About GASB 96 Implementation
GASB Statement No. 96, Subscription-based Information Technology Arrangements, is effective for fiscal years beginning after June 15, 2022, and all reporting periods after that. This Statement is based on the standards established with Statement No. 87, Leases, and follows the same foundation, steps, and rules.
The Statement defines subscription-based information technology arrangements (SBITAs) and when such SBITAs should be recorded as right-to-use subscription assets and corresponding subscription liabilities. The Statement also covers which costs associated with the SBITAs are to be included in capitalization, and the disclosures required.
What is an SBITA?
An SBITA is a contract that conveys control of the right to use another party’s (an 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.
The biggest challenge for organizations will be gathering and evaluating their SBITA population and ensuring completeness. We recommended that organizations review their SBITAs and collect the data necessary to assess if the changes to GASB 96 will apply to such contracts. The information that will be needed includes vendor, description, building/location, account (G/L), contract term (period of coverage), costs associated (may involve more than just subscription payments), and options to extend.
What to Do Now?
- Get an overall understanding of GASB 96.
- Work with your IT/Technology Directors to obtain a list of SBITAs.
- Complete Yeo & Yeo’s SBITA spreadsheet (the template can be requested from your Yeo & Yeo auditor).
- After the assessment of SBITAs that will be affected by the implementation of GASB 96:
- Calculate journal entries.
- Work with the auditor.
Our GASB 96 for School Districts brief provides more detailed information and guidance on Statement No. 96.
Contact Yeo & Yeo if you have questions about GASB 96.