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Software SBITA: GASB 96 Quick Reference Guide

Government Accounting Standards Board's (GASB) Statement No. 96 is effective for FY23 beginning 7/1/22. There was no previous accounting guidance for Subscription-Based Information Technology Arrangements (SBITA).

SBITA contract modifications may trigger changes to the accounting so continued communication between departments & general accounting will be important during the life of the contract.

Definitions

Click each term or phrase to learn definitions.

Subscription-Based Information Technology Arrangement (SBITA)
  • SBITAs provide governments with access to vendors’ IT software and associated tangible capital assets for subscription payments without granting governments perpetual license or title to the IT software and associated tangible capital assets.
  • A contract that conveys control of the right to use an SBITA vendor’s IT software, alone or in  combination with tangible capital assets as specified in the contract for a period of time in an exchange or exchange-like transaction.
  • This definition excludes contracts that solely provide IT support services (routine maintenance) but includes contracts that contain both a right-to-use IT asset component and an IT support services component.

Conveys Control of the Right To Use (Must Meet Both)
  • The right to obtain the present service capacity from use of the IT assets.
  • The right to determine the nature and manner of use of the IT asset.

Exchange or Exchange-Like Transaction

Each party is essentially giving up and receiving something in equal value. (making payments over time for the right to use the IT asset)

SBITA Contract Term – Period of Time
  • The lease term is the period during which a lessee has a noncancelable right to use the IT asset.
  • Periods for which both the government and the SBITA vendor have the option to terminate the contract without permission from the other party (or if both parties have to agree to extend) are cancellable periods and are excluded from the contract term.

Short-Term SBITA

A short-term SBITA is a contract, that at commencement, has a maximum possible term under the SBITA contract of 12 months (or less) including any options to extend, regardless of their probability of being exercised. For a SBITA that is cancelable by both the government and the SBITA vendor, such as a rolling month-to-month or a year-to-year SBITA, the maximum possible term is the noncancellable period, including any notice periods.

Updated Object Codes To Use for SBITA Payments

The following object codes should now be used for recording SBITA expenses. A short-term contract is 12 months or less and long term is over 12 months. The term length is calculated for noncancellable periods and include options to extend.

  • 713414 SOFTWARE LICENSES – OWNED (perpetual license)
  • 713416 SHORT TERM SOFTWARE SUBSCRIPTION
  • 713418 VARIABLE USAGE FEES - SOFTWARE SUBSCRIPTION (for long term contracts only)
  • 713420 LONG TERM SOFTWARE SUBSCRIPTION
  • 723010 CONSULTING SERVICES - INFORMATION TECHNOLOGY

New SBITA Contracts or Contract Modifications

Any time there are new SBITA contracts or modifications to existing contracts, you must notify the General Accounting and Finance Reporting (GAFR) Office.

Email a copy of all new SBITA contracts, amended contracts and any related information to finance@ohio.edu.

GAFR needs to be timely informed of any changes to the contract or SBITA such as the following:

  • A full or partial termination of the contract has occurred.
  • A change in the lease term or payment schedule
  • A change in estimated amounts for payments
  • A change in interest rate the lessor charges the lessee.
  • Any resolved contingencies that change future variable payments to now be fixed
  • The lease asset has become impaired – the asset is damaged or cannot be used by the lessee or the lessee’s right to use the asset decreases.
  • Adding or removing an asset from the lease
  • A change in the cancellation options
  • The lessee elects to exercise an option even though it was previously determined that it was reasonably certain that the lessee would not exercise that option.
  • The lessee elects not to exercise an option even though it was previously determined that it was reasonably certain that the lessee would exercise that option.
  • An event specified in the contract that requires an extension or termination of the lease takes place.
  • It is reasonably certain that a fiscal funding clause will be exercised.