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)
Modifications and Terminations

The provisions of a SBITA contract may be amended while the contract is in effect. Examples of amendments to SBITA contracts include:

  • Changing the contract price of the arrangement.
  • Lengthening or shortening the subscription term.
    –OR–
  • Adding or removing underlying information technology (IT) assets.

An amendment must be considered a SBITA modification unless the agency’s right to use the underlying IT assets decreases, in which case the amendment must be considered a partial or full SBITA termination.

If variable payments of a SBITA contract depend on an interbank offered rate (IBOR), an amendment of the contract solely to replace the IBOR with another rate by either changing the rate or adding or changing fallback provisions related to the rate, is NOT a modification to the SBITA contract.

A subscription liability is NOT required to be remeasured solely for a change in an index or a rate used to determine variable payments.

A subscription liability is NOT required to be remeasured, nor is the discount rate required to be reassessed, solely for a change in an agency’s incremental borrowing rate.

Or click on the headings below to open a topic individually.

Modifications [+]

The agency must account for an amendment during the reporting period resulting in a modification to a SBITA contract as a separate SBITA if:

  • The SBITA modification gives the agency an additional subscription asset by adding access to more underlying IT assets that were not included in the original SBITA contract.
    –AND–
  • The increase in subscription payments for the additional subscription asset does not appear to be unreasonable based on:
    • The terms of the amended SBITA contract
      –AND–
    • Professional judgment, maximizing the use of observable information.

Unless a modification is reported as a separate SBITA, the agency must account for a SBITA modification by remeasuring the subscription liability. A subscription asset generally must be adjusted by the same amount as the corresponding subscription liability when that liability is remeasured. However, if that change reduces the carrying value of the subscription asset to zero, any remaining amount must be reported in the resource flows statement (for example: a gain).

Terminations [+]

The agency must account for an amendment during the reporting period resulting in a decrease in the agency’s right to use the underlying IT assets as a partial or full SBITA termination. For example: the subscription term is shortened or the underlying IT assets are reduced.

The agency generally must account for the partial or full SBITA termination by reducing the carrying values of the subscription asset and subscription liability and recognizing a gain or loss for the difference.

Provisions that allow for the termination of a SBITA due to a violation of SBITA terms and conditions (such as a default on payments) are NOT considered options to terminate the SBITA. For example:

  • The vendor can cancel the contract for non-payment.
    –OR–
  • The agency can cancel if accessibility to the IT software becomes impaired.