GASB-96 is a new accounting standard that applies to government organizations with subscriptions to IT software that meets specific requirements.
We’ve put together this list of resources to help you as you begin implementing GASB-96 within your organization.
Who will need to implement GASB-96?
You should evaluate whether you’ll need to implement GASB-96 if you work for:
- A local government, such as a county, municipality, or school district
- Higher education, such as a public college or university
- A public hospital or healthcare provider
Implementing GASB-96 will require the collection and analysis of data related to your subscription-based IT arrangements (SBITAs and crafting relevant accounting schedules and journal entries.
Depending on the size and complexity of your organization, you may need to work with other departments (particularly IT) to create an implementation roadmap for this project. Proper planning and access to the right resources (which we’ll lay out below) will also be key for successful implementation.
Once GASB-96 has been fully implemented within your organization, you’ll need to maintain ongoing compliance.
Tip: You won’t want to leave implementation to the last minute. Locating relevant subscription contracts and extracting the necessary data can be time consuming. Waiting too long may put you at risk of missing the deadline to comply making it difficult to adequately prepare for audit.
Resources for GASB-96 implementation
Depending on your organization’s size and complexity, implementing GASB-96 may take months of work. You’re likely going to be working with other members of your finance team, as well as non-finance personnel.
Below are resources that can be helpful in understanding and implementing GASB-96.
| #1 – Summary of Statement No. 96 – The official Governmental Accounting Standards Board (GASB) document that outlines the details of GASB-96. #2 – GASB-96 Decision Tree – A quick tool used to determine whether you have a GASB-96 subscription. #3 – GASB-96 Definitions, Guidelines, & Best Practices – Summarizes the details outlined in Summary of Statement No. 96 in an easy-to-understand format. #4 – Don’t Wait to Implement GASB-96: Why Early Adopters Will Come Out Ahead – Emphasizes the importance of taking early action to start implementing GASB-96 instead of waiting until the last minute. Great for explaining why GASB-96 implementation is important to non-finance colleagues. #5 – Planning and Preparing for GASB-96 – Lays out the practical step-by-step process that you’ll need to follow to implement GASB-96 within your organization. #6 – Understanding Accounting for GASB-96 Project Costs – Outlines the various costs associated with implementing GASB-96 at different stages of the project, and how to account for them. |
#1 – Summary of Statement No. 96
Summary of Statement No. 96 – Subscription-based Information Technology Arrangements is a pronouncement created by the Governmental Accounting Standards Board (GASB) in May 2020.
It provides governments with guidance on accounting and financial reporting for SBITAs by defining what counts as a SBITA and how to correctly record one in your financial records.
Since this document was issued directly by the GASB, this should be your go-to resource when implementing GASB-96 within your organization.
If you’re working with someone struggling to decode the meaning and requirements of Summary of Statement No. 96, fear not. This is where resources #2–6 come into play. These resources help explain GASB-96 in more streamlined, easy-to-understand terms.
#2 – GASB-96 Decision Tree – how to determine if you have a GASB-96 subscription
Before you start planning a large-scale implementation of GASB-96 within your organization, it’s important to review your SBITAs and make sure that it’s applicable.
If it turns out that your organization doesn’t have any subscription-based information technology arrangements, then GASB-96 will not apply.
To help you determine whether your organization has SBITAs within the definition of GASB-96, we’ve created a basic decision tree that includes the following five steps:
- Step 1: Does the contract convey the right to use another party’s IT software?
- Step 2: Is the IT software contract alone or in combination with tangible capital assets?
- Step 3: Is the cost of the software component insignificant compared to the cost of the underlying tangible asset(s)?
- Step 4: Is the contract a licensing arrangement that provides a perpetual license to use a vendor’s software?
- Step 5: Is the IT software controlled for a period of time in an exchange or exchange-like transaction?
Download your copy of the GASB-96 Decision tree here.
#3 – GASB-96 Definitions, Guidelines, & Best Practices
Once you’ve used the Decision Tree above to determine if you have SBITAs that fall under GASB-96, you’ll need to take a more in-depth look at all the details and intricacies of GASB-96.
“GASB-96 Definitions, Guidelines, & Best Practices” is an article that Debtbook has created to help. It breaks down the information contained within GASB-96 into a more condensed and easy-to-understand form.
From this resource, you will learn:
- Who is impacted by GASB-96
- The purpose of GASB-96
- When GASB-96 goes into effect
- How to prepare for and get started on GASB-96 implementation
It also outlines the three phases of challenges faced by organizations looking to implement GASB-96. With this knowledge, you’ll go into the implementation process with a better idea of what to expect.
#4 – Don’t Wait to Implement GASB-96: Why Early Adopters Will Come Out Ahead
Has your organization recently dealt with implementing GASB-87 related to governments’ financial reporting of leases? If so, then you know how much work and planning are required to implement one of these new standards.
Implementing GASB-96 requires a similar amount of effort.
Your team must understand the risks of waiting until the last minute to implement GASB-96. For instance:
- Locating all of the relevant subscription contracts may be more challenging than first thought.
- Extracting subscription contract data can be tedious, time-consuming, and complex.
- Constrained timelines lead to an Increased risk of errors.
- You may lack enough time to prepare for audits, and you may miss the deadline to comply with GASB-96.
On the more positive side, you and your team should also be aware of all of the benefits that you’ll gain by preparing and implementing GASB-96 early. For instance:
- Implementation may be easier and involve minimal headaches.
- You’ll have more time and resources to put toward other projects.
- You’ll have to ensure maximum data accuracy.
- You’ll reduce information silos.
- You’ll secure vital contract data.
Our article “Don’t Wait to Implement GASB-96: Why Early Adopters Will Come Out Ahead” will help explain to your teams the importance of getting started as soon as possible.
#5 – Planning and Preparing for GASB-96
We understand that implementing a new accounting standard can be intimidating.
That’s why Kasey Harris, DebtBook’s Vice President of Accounting Product & Enablement, has put together the article “Planning and Preparing for GASB-96,” which breaks down the preparation process for GASB-96 into bite-sized steps.
You’ll learn the process all government organizations should go through to implement GASB-96 effectively.
The article takes you through 8 steps of GASB-96 implementation:
Step 1: Creating Your Implementation Roadmap
Step 2: Collecting Your Subscription-Based IT Arrangements (SBITAs)
Step 3: Gathering Project Expenses and Extracting Data
Step 4: Categorizing the Expenses
Step 5: Crafting the Initial Schedules and Journal Entries
Step 6: Launching the Review Process
Step 7: Preparing Note Disclosures
Step 8: Adhering to Ongoing Compliance
You can also read our article titled “Building an Action Plan for GASB-96 Compliance.”
#6 – Understanding Accounting for GASB-96 Project Costs
The “Project Costs Help Document” explains what Project Costs are and how they should be accounted for under GASB-96.
Activities associated with subscriptions need to be grouped into three stages and have their costs accounted for accordingly.
The three stages are:
1. Preliminary project stage costs
These are cash outlays early on in the project that ultimately lead to the final selection of the technology and subscription vendor.
These costs include those associated with activities such as evaluating alternatives, determining necessary technology, and selecting a SBITA vendor.
2. Initial implementation stage costs
These are costs that are necessary to place a subscription asset into service. These costs should generally be capitalized as an addition to the subscription asset.
3. Operational and additional implementation stage costs
Costs at this stage include maintenance and other activities for a government’s ongoing operations related to a SBITA. These costs should be expensed as they’re incurred.