LUTZ BUSINESS INSIGHTS

 

GASB 96

GASB 96 + Subscription-Based Information Technology Arrangements

paul baumert, healthcare consulting shareholder

 

Governmental entities are required to implement GASB 96 for fiscal years beginning after June 15, 2022. It provides guidance on financial reporting regarding Subscription-Based Information Technology Arrangements (SBITAs). SBITAs are contracts that convey control of the right to use a third party’s software, with or without tangible capital assets, in an exchange or exchange-like transaction over the term of the contract.

The new standard requires recording a right-to-use subscription asset (intangible asset) and a corresponding liability on the balance sheet.

  • The asset is recorded as the sum of the initial subscription liability amount, payments made to the third-party vendor before the start of the subscription term, and capitalizable implementation cost, less any incentives received from the third-party vendor at or before the commencement of the subscription term.
  • The liability is recorded at the present value of subscription payments expected to be made during the subscription term discounted using the interest rate the third-party vendor charges or the governmental entity’s incremental borrowing rate if the third-party’s interest rate is not determinable.

The asset is amortized as an outflow of resources over the subscription term.  The subscription liability is reduced as payments are made, and interest expense is recognized as an outflow of resources. Financial statement disclosures regarding SBITAs will also be required. If you have any questions on this topic, please contact us.

ABOUT THE AUTHOR

Paul Baumert

402.827.2315

pbaumert@lutz.us

LINKEDIN

PAUL BAUMERT + HEALTHCARE CONSULTING SHAREHOLDER 

Paul Baumert is a Consulting Shareholder at Lutz with over 20 years of experience in accounting and consulting for healthcare and nonprofit industries. He specializes in the areas of financial management support services and reimbursement analysis.

AFFILIATIONS AND CREDENTIALS
  • Nebraska Society of Certified Public Accountants, Member
  • American Institute of Certified Public Accountants, Member
  • Healthcare Financial Management Association, Member
  • Certified Public Accountant
  • Fellow of the Healthcare Financial Management Association
EDUCATIONAL BACKGROUND
  • BSBA, Creighton University, Omaha, NE
COMMUNITY SERVICE
  • Skutt Catholic High School, Board Member, Finance Committee Chair
  • Elkhorn Public School Foundation, Past President
  • Iowa Healthcare Financial Management Association, Past President

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