Skip to content
Breadcrumbs

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Note: To navigate this guide on a mobile device you must use the Table of Contents.

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Universities

Subscription-Based IT Arrangements (SBITA)
Stages of Implementation

According to GASB 96, other than making subscription payment activities associated with a subscription-based information technology arrangement (SBITA), other outlays must be grouped into the one of three SBITA stages:

  • Preliminary project stage
  • Initial project stage
  • Operational and additional implementation stage

In classifying certain outlays into the appropriate stage, the nature of the activity must be the determining factor.

SBITA Stages

  1. Preliminary Project Stage – period before vendor selection:
    • Request for proposal (RFP) costs
    • Demonstration costs
    • Evaluation of alternatives
    • Project management costs before the selection of the final vendor
    • Legal review of RFP
    • Prior system costs
    • Selecting final vendor
    Outlays in this stage must be expensed as incurred.
  2. Initial Implementation Stage – period between vendor selection and Go Live:
    • Time and cost to place the subscription asset into service
    • Configuration
    • Coding
    • Testing, parallel processing prior to Go Live and installation
    • Initial conversion to get the system to Go Live
    Outlays in this stage are capitalized as an addition to the subscription asset. Stage 2 is completed when the first independent or group of independent modules are put into service. Any additional modules are considered subsequent implementation.
  3. Operational and Additional Implementation Stage – period after Go Live:
    • Stabilization
    • Training
    • Conversion of unneeded data/ archiving/ legacy data
    • Outlays after Go Live that do not increase functionality or efficiency
    • Maintenance
    • Subsequent implementation activities
    Outlays in this stage must be expensed as incurred. There is an exception — the agency must capitalize costs if the additional implementation increases the functionality or efficiency of the subscription asset.

The agency is permitted (but not required) to include in the measurement of the subscription asset capitalizable outlays associated with the initial implementation stage and the operation and additional implementation stage incurred prior to the implementation of GASB 96.

Training costs must be expensed as incurred regardless of the stage in which they are incurred.

On GASB’s Pronouncements page (in the Implementation Guide category), in GASB’s Implementation Guide No. 2023-1, Implementation Guidance Update–2023, under the Statement No. 96, Subscription-Based Information Technology Arrangements section, question 4.9 states:

  • Q—A government enters a six-year SBITA contract with no options to extend or terminate the contract and begins making semiannual subscription payments to the SBITA vendor immediately after the contract takes effect. The initial implementation stage is not completed until the end of the second year after the contract takes effect. What is the subscription term?
  • A—Although the length of the contract is six years, the subscription term is four years. The initial implementation stage is completed at the end of the second year of the contract. Therefore, in accordance with paragraphs 9 and 15 of Statement 96,the subscription term commences at the beginning of the third year and ends at the conclusion of the sixth year when the SBITA contract ends.