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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 8 – Leases/SBITAs

Note 8 incorporates the disclosures for both:

  • GASB Statement No. 87, Leases
  • GASB Statement No. 96, Subscription-Based Information Technology Arrangements

According to GASB 87, agencies that are lessees and/or lessors are required to:

  • Report leases under a single model.
  • Disclose the agency’s leasing arrangements (including matters related to the timing, significance and purpose of the lease) in the notes to financial statements.
  • Report certain lease liabilities that were not reported before the implementation of GASB 87.

Lessees

A lessee must recognize a lease liability and a lease asset at the start of the lease term. The notes to financial statements must include a description of leasing arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be made. For more information, see Lessees.

Lessors

A lessor must recognize a lease receivable and a deferred inflow of resources at the start of the lease term. The notes to financial statements must include a description of leasing arrangements and the total amount of inflows of resources recognized from leases. For more information, see Lessors.

Regulated Leases

Certain leases are subject to external laws, regulations, or legal rulings. Although exempt from GASB 87, lessors of regulated leases must recognize inflows of resources (for example, revenue) based on the payment provisions of the lease contract. A lessor with one or more regulated leases must make disclosures about those lease activities, except short-term leases. For more information, see Lessors-Regulated Leases.

SBITAs

According to GASB 96, agencies that have subscription-based information technology arrangements (SBITAs) must recognize a right-to-use subscription asset and a corresponding subscription liability. Agencies are required to disclose:

  • Descriptive information about their SBITAs
  • The amount of subscription assets recognized
  • A schedule of future subscription payments to be made

For more information, see Subscription-based IT Arrangements

Submit a copy of the agency’s Note 8 from its published AFR through the LNSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note name/number. If Note 8 does not apply, do NOT submit a note to indicate “not applicable.”