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SBITAs: What is GASB 96?

GASB 96 is one of the latest standards issued by the Governmental Accounting Standards Board (GASB). This pronouncement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs). In this post, we'll explain what GASB 96 is, how it works, what needs to be considered when implementing it, and other important information.

What is GASB 96?

GASB 96 is a standard that provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs). SBITAs are agreements where a government entity subscribes to a vendor's information technology service or application. Examples of SBITAs include software as a service (SaaS), cloud computing, and hosting arrangements.

How does GASB 96 work?

GASB 96 requires government entities to classify SBITAs as either capital assets or expenses, depending on the nature of the arrangement. If the SBITA meets certain criteria, such as having a significant upfront payment or a long-term contract, it may be classified as a capital asset. If the SBITA does not meet these criteria, it may be classified as an expense.


If the SBITA is classified as a capital asset, it must be recorded as an intangible asset on the government entity's balance sheet. The asset must also be amortized over its useful life, the period over which the government entity expects to receive benefits from the SBITA.


If the SBITA is classified as an expense, the government entity must recognize the expense in the period it is incurred. The expense should be reported on the government entity's income statement.


What needs to be considered when implementing GASB 96?

Implementing GASB 96 can be challenging for government entities, as it requires careful consideration of the nature of the SBITA arrangement. Government entities should take the following steps when implementing GASB 96:

  • Identify all SBITA arrangements and determine their classification as either capital assets or expenses.

  • Calculate the useful life of SBITAs classified as capital assets and amortize them accordingly.

  • Ensure that all SBITAs are properly disclosed in the financial statements.

  • Develop internal controls to ensure that SBITAs are properly classified and reported in future periods.

GASB 96 is effective for fiscal years beginning after June 15, 2022. However, early adoption is permitted. Government entities should consult with their auditors and accounting professionals to ensure they are in compliance with the new standard.


GASB 96 provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs). Government entities should carefully consider the nature of their SBITA arrangements and properly classify and report them in their financial statements. Early adoption is permitted, and government entities should consult with their auditors and accounting professionals to ensure compliance with the new standard.


Are there any helpful tools to consider utilizing for this?

There are several helpful tools that can assist government entities in implementing GASB 96. Here are a few examples:


  • Accounting software: Accounting software can help government entities track their SBITA arrangements and properly classify them as capital assets or expenses. Some accounting software also includes amortization calculators that can help entities calculate the useful life of SBITAs.

  • Contract management software: Contract management software can help government entities keep track of their SBITA contracts and ensure that they are properly disclosed in the financial statements.

  • Internal control software: Internal control software can help government entities develop and implement internal controls to ensure that SBITAs are properly classified and reported in future periods.

  • Professional services: Accounting professionals and consultants can provide guidance and assistance in implementing GASB 96. They can help government entities properly classify their SBITA arrangements and develop internal controls to ensure compliance with the new standard.


It is important for government entities to carefully evaluate their needs and budget when considering which tools to utilize for implementing GASB 96. They should also ensure that any tools or services they utilize are reliable and comply with relevant accounting standards and regulations.

Your BrooksWatson audit engagement team will work closely with you to ensure that you are prepared and that the implementation process runs smoothly.


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