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What is GASB 96?

Definition:

GASB 96 addresses Subscription-Based Information Technology Arrangements (SBITAs). It establishes criteria for recognizing and reporting SBITAs in financial statements, ensuring consistent and accurate accounting practices across different government entities. It defines what qualifies as an SBITA and provides rules for recognizing and measuring these arrangements.

The primary objective of GASB 96 is to improve the transparency and consistency of financial reporting for governments that engage in subscription-based IT contracts. It helps governments accurately reflect the financial impact of these arrangements in their financial statements, thereby enhancing the quality and comparability of financial information.

What GASB 96 means for government entities

GASB 96 requires subscription-based IT arrangements (SBITAs) to be reported on the face of the financial statements and enhances the relevance and reliability of a government’s SBITA information. This shift means more work to be done for finance teams to establish and maintain compliance

GASB 96 has several implications for government entities:

  • Accounting Standards: Government entities are required to adhere to GASB standards in their financial reporting. GASB 96 establishes specific accounting rules for Subscription-Based Information Technology Arrangements (SBITAs). Governments must follow these standards to ensure their financial statements accurately reflect the financial impact of SBITAs.
  • Consistency: GASB 96 aims to create consistency in accounting and reporting practices for SBITAs across various government entities. This consistency makes it easier for financial statement users to compare the financial performance and position of different governments.
  • Improved Transparency: The standard enhances the transparency of financial reporting related to SBITAs. It requires government entities to provide detailed information about these arrangements in their financial statements, helping stakeholders, such as taxpayers and investors, better understand the financial implications.
  • Record-Keeping and Documentation: Government entities must establish systems and processes for evaluating whether their IT contracts qualify as SBITAs under GASB 96. This involves maintaining records and documentation of the decisions and assessments made regarding each contract.
  • Resource Allocation: Implementing GASB 96 may require government entities to allocate resources, including time and expertise, to comply with the standard's requirements. They may need to assess the impact of the standard on their financial teams and allocate resources accordingly.

 

What’s important here?

GASB 96 introduces a framework for consistent accounting and reporting of SBITAs, which is aimed at enhancing transparency, comparability, and accuracy in financial reporting for government entities. It requires them to follow specific accounting rules and allocate resources to ensure compliance with the standard. Building an implementation roadmap can help government finance teams clearly identify a timeline and allocate resources to ensure successful compliance. 
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