Software SBITA: Determine the Correct Object Code
For purposes of applying GASB Statement 96, SBITA (Subscription Based Information Technology Arrangement) purchases can primarily be broken down into two groups. You can determine the correct object code to use by figuring out in which group your purchase fits:
- Option 1 – Online Content: online access to databases, journals, news sources, library/reference materials, books, tests, study aids, placement tests, exams, online learning materials
- Option 2 – Software Contract: A set/collection of instructions/programs that perform operations and specific operations based on commands of the user (Cloud data storage services are included)
Option 1: Online Content
Use the appropriate object code as follows:
- 712310 Instructional Supplies & SVCS
- 712330 Materials for Testing Purposes
- 713425 Database Access Fees
- 713615 Electronic Books
- 713620 Printed or Electronic Subscriptions
- 713630 Electronic Reference Sources
- 713635 Other Information Resources
- 713670 InterLibrary Loan Borrowing
- 713675 Consortial Borrowing Memberships
- 719130 Training
- 721510 Online Learning Services - Undergraduate
- 721515 Online Learning Services - Graduate
- 721530 Online Educ - Professional Services
Option 2: Software
Software purchases can be broken into two categories. To determine the correct object code, you can ask these questions:
- Does the contract include a perpetual license or the purchase and ownership/title to the software which allows for indefinite use with no more payments except for future maintenance and support?
- Or, does the contract provide for control of the right to use the third party vendor's IT software for a period of time with no transfer of ownership and the software can no longer be used if we stop making payments?
A. Perpetual License/ Purchase of Owned/Titled Software
If the purchase price of the software (excluding maintenance & support fees) is:
- Less than $500,000-charge the purchase, software development, maintenance, support, and related software fees to object code 713414 - SOFTWARE LICENSES – OWNED.
- More than $500,000-Charge the purchase to object code 741410 - CAPITAL SOFTWARE
B. Right to Use Software Subscription
Can this contract be cancelled by either party without cause for any reason at any time - even if it includes a notification period?
Contract With Early Termination Clause
A contract with an early termination clause is a contract that can be canceled by either party without cause for any reason at any time, and the notification period is 12 months or less.
All software payments listed/paid in the contract including software subscription costs, vendor software implementation, software maintenance/support, fees, storage, etc. should be charged to 713416 SHORT TERM SOFTWARE SUBSCRIPTION.
Contract Without Early Termination Clause
The contract term is the period during which OHIO has a non-cancelable right to use the underlying IT assets plus any periods included in options to extend. Periods for which BOTH OHIO and the third party vendor have the option to terminate the contract without permission from the other party or if both parties have to agree to extend are CANCELABLE periods and are EXCLUDED from the calculation of the length of the contract term.
Does the contract at the commencement of the term, have a maximum possible term, including extensions without approval of vendor, under the contract of 12 months or less OR over 12 months?
Contract of 12 Months or Less
All software payments listed/paid in the contract including software subscription costs, vendor software implementation, software maintenance/support, fees, storage, etc. should be charged to 713416 SHORT TERM SOFTWARE SUBSCRIPTION.
Contract Over 12 Months
Fixed software payments listed/paid in the contract including software subscription costs, vendor software implementation, software maintenance/support, fees, storage, etc. should be charged to 713420 LONG TERM SOFTWARE SUBSCRIPTION.
Variable software payments such as transaction fees or number of user seats listed/paid in the contract should be charged to 713418 – VARIABLE USAGE FEES - SOFTWARE SUBSCRIPTION.
Hours spent by OHIO employees on implementation of this software needs to be tracked and reported to GAFR.
- Long Term SBITA - Implementation tracking hours needed
- Implementation includes:
- Configuration, Coding, Testing, and Installation.
- Initial conversion to get the system to go live.
- Data conversion included if necessary to place into service.
- Implementation includes:
Implementation is completed when SBITA is configured, tested, and made compatible with existing IT.
Software Costs/Development Object Codes To Stop Using
Software costs/development should no longer be charged to the following object codes:
- 713130 Data Communication Systems Parts
- 713210 Networking/Telecommunication Equipment
- 713440 Internet & Data Communications
- 713450 Technical Service Charges
- 717200 Hardware Maintenance
- 719110 Conference Registrations
- 719120 Memberships and Dues
- 721010 Consulting Services
- 723010 Consulting Services - Information Technology
- 725030 Professional Services
- 770400 Miscellaneous Expense
Owned hardware costs and hardware maintenance should be charged to the appropriate hardware object codes.