The types of software that typically fall under GASB 96 are cloud-based or hosted software applications accessed through a subscription model. These include systems like:
- Enterprise Resource Planning (ERP) software
- Payroll and human capital management systems
- Budgeting and forecasting tools
- Document management systems
- Financial reporting and accounting platforms
- Student information systems (in higher ed)
- Utility billing or permitting systems (in local government)
These applications are usually delivered as Software-as-a-Service (SaaS) and hosted on the vendor’s infrastructure. Unlike traditional on-premise software, where the organization purchases a perpetual license and hosts the software internally, subscription-based cloud software often qualifies as a SBITA under GASB 96.
What’s important here?
GASB 96 applies to subscription-based software arrangements where the organization has control of the right to use the software over a noncancelable term. This typically includes cloud-based applications delivered through a SaaS model such as financial systems, HR platforms, and budgeting tools. On-premise software is generally excluded unless it includes a subscription component that meets the SBITA criteria.
Accurately identifying which software arrangements fall under GASB 96 is important for determining whether a subscription asset and liability must be recognized on the balance sheet.