GASB-96:Definitions, Guidelines, & Best Practices
GASB-96 will fundamentally change the way that governments account for subscription-based information technology arrangements (SBITAs). Learn key definitions, guidelines, and best practices.


Understanding GASB-96

GASB-96 requires subscription-based IT agreements (SBITAs) to be reported on the face of the financial statements and enhances the relevance and reliability of a government’s SBITA information. This shift means more work to be done for finance teams that are already understaffed throughout the country.

So what does this mean?

A lease is a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction.

A lease term is the period during which a lessee has a noncancelable right to use an underlying asset (referred to as the noncancelable period), plus periods covered by an option to extend (if it is reasonably certain the option will be exercised) or terminate (if it is reasonably certain the option will not be exercised).

To determine whether a contract conveys control of the right to use the underlying asset, a government should assess whether it has both of the following:

  1. The right to obtain the present service capacity from use of the underlying asset as specified in the contract
  2. The right to determine the nature and manner of use of the underlying asset as specified in the contract

For the Lessor: A lessor owns the asset(s) in question (such as a vehicle, server, or building) and leases it out to the lessee. They must recognize a lease receivable and a deferred inflow of resources. Because the lessor retains ownership of the asset, custody generally reverts to them at the conclusion of the lease term.

For the Lessee: A lessee has the right to use the asset, provided they meet the terms spelled out in the lease contract. They must recognize a lease liability and an intangible right-to-use lease asset.

A short-term lease is a lease with a maximum possible term of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract.

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Who is Impacted by GASB-96?

GASB-96 applies to financial reports from:

  • Local government (counties, municipalities, school districts)
  • Higher education (public colleges and universities)
  • Public hospitals and healthcare providers
financial professionals working


What is the Purpose of GASB-96?

Every organization uses some sort of IT subscription service (e.g., ERP System, Office 365, Zoom, DocuSign). These subscription payments are typically expensed with little visibility into the obligations or liabilities governments have.GASB-96 helps to increase transparency in the accounting and disclosure for these contracts.


When Does GASB-96 Go Into Effect?

GASB-96 becomes effective for reporting periods beginning after June 15, 2022, meaning entities with a June 30th fiscal year-end will be the first to implement for their fiscal year 2023.


Getting Started On Your GASB-96 Implementation

Preparing for GASB-96 implementation and ongoing compliance will be a very time-intensive process, and governments should start to evaluate the impact of the new guidance on their financial teams. Depending on the number of SBITAs an organization has and the size of the team, it can take 12 weeks or longer for a small team to plan and prepare for GASB-96.

There are many tasks to consider as you prepare for the mandatory change:

  • Understand the structure and requirements of the new accounting standard
  • Evaluate whether to overhaul your current SBITA reporting structure yourself or leverage a technology solution
  • Complete GASB-96 implementation before the 2023deadline

Subscription management software, such as DebtBook, has been developed specifically with governments and other public entities (and their unique challenges) in mind. These solutions can help organizations operate more efficiently and significantly reduce the burden placed on local teams to comply with new financial reporting standards. Most importantly, they can address all three phases of challenges faced by organizations looking to implement GASB-96:

  • Upfront SBITA Organization & Data Extraction
  • Schedule Creation
  • Ongoing Compliance
DebtBook GASB87 lease organizer

If this process sounds overwhelming, you may want to consider a subscription management solution. These types of software programs help organizations implement and maintain compliance with GASB-96 by automating time-consuming processes and eliminating manual data entry.


Getting Started

DebtBook delivers a complete, straightforward solution to address all three phases of challenges faced by organizations looking to implement GASB-96:

  1.  PHASE 1: Upfront SBITA Organization & Data Extraction
    ○      Our team can help organize and extract data from all of your contracts and have you verify the information, or we can guide you through the process to enter the information in the application.
  2. PHASE 2: Schedule Creation
    ○      DebtBook generates all schedules necessary to comply withGASB-96. Share with your team and external auditor(s) for use and verification.
  3.  PHASE 3: Ongoing Compliance
    With 24/7 accessibility and more efficient collaboration across departments, you can ensure all future contracts are accounted for and uploaded in a timely, stress-free manner.

Disclaimer: DebtBook does not provide professional services or advice. DebtBook has prepared these materials for general informational and educational purposes, which means we have not tailored the information to your specific circumstances. Please consult your professional advisors before taking action based on any information in these materials. Any use of this information is solely at your own risk.

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