What is the Commencement Date of a SBITA?

Key Details of the Commencement Date

• When it occurs: The commencement date is not when the contract is signed but when the government gains access to and control over the IT resource.
• Recognition of obligations: On this date, the government records the present value of subscription payments as a liability and establishes a subscription asset for the right to use the software.
• Link to a subscription term: The subscription term includes any periods covered by options to extend or terminate if it is reasonably certain that the government will exercise those options. The commencement date anchors this timeline.

The commencement date is critical because it determines when the subscription begins appearing on financial statements. Misidentifying the date could lead to inaccurate reporting of assets and liabilities, which can affect transparency, audits, and compliance with GASB standards.

Finance teams should carefully review contracts and service access provisions to ensure the correct date is applied.

What's Important Here?

The commencement date of a SBITA is the point when a government obtains the right to use the subscription software, not simply when the contract is signed. 

This date triggers recognition of both the subscription asset and liability under GASB 96, making it essential for accurate and compliant financial reporting.