Draft:GASB 96

GASB 96, or GASB Statement 96, is an accounting standard issued by the Governmental Accounting Standards Board (GASB), a private, non-governmental organization tasked with creating accounting and financial reporting standards for state and local governments within the United States. Statement 96 requires government entities to record a subscription-based liability if a contract enables the entity to control the right-of-use of an IT asset. GASB 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.

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. GASB Statements do not apply to private entities or non-US government entities; they are typically governed by FASB and IFRS, respectively.

SBITA definition
SBITAs are contracts granting control to use a vendor's IT software and related assets for a specified period as specified within a contract. The provisions outlined within GASB 96 are not applicable to immaterial items.

The subscription asset are first measured by finding the summation of the initial subscription liability amount, any payments made to the vendor before the subscription term starts, and any implementation costs that can be capitalized, less any incentives received from the vendor at or before the subscription term start date.

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.

Implementation
GASB has implemented the reporting of SBITAs effective for the fiscal years beginning after June 15, 2022 and all subsequent reporting periods.