Understanding GASB 96 and Its Growing Presence in Financial Conversations

In the realm of public accounting and financial reporting, new standards can occasionally pop up without much fanfare—until they start affecting budgets, statements, and daily operations. GASB 96, introduced by the Governmental Accounting Standards Board (GASB), is one such directive that has begun to circulate more widely, leaving many finance professionals puzzled about its implications. A 2023 Public Finance Survey found that nearly 45% of local government accountants felt unprepared for new GASB measures, highlighting why GASB 96 is garnering heightened interest. Below, we break down what it actually entails and why so many people are asking questions about it.

What Exactly Is GASB 96?

GASB 96 specifically addresses Subscription-Based Information Technology Arrangements (SBITAs). In simpler terms, it lays out the accounting rules for contracts where government entities access and use IT software or services over time, rather than purchasing the software outright. The standard requires governments to recognize a subscription asset—reflecting their right to use the IT arrangement—and a corresponding subscription liability. This shift aims to enhance transparency around long-term commitments, but it also introduces new processes for recognizing, valuing, and reporting these intangible assets. Given how many local agencies and public institutions rely heavily on subscription models for cybersecurity, data analytics, and other essential software, GASB 96 has become increasingly difficult to ignore.

Why People Don’t Know Much About It

Despite its importance, many practitioners find themselves in the dark about GASB 96. One reason is that it’s relatively new, having been overshadowed by other standards like GASB 87 (focused on leases). Additionally, smaller or mid-tier public organizations may not have a dedicated staff to track emerging accounting guidelines, leading to last-minute scrambles when adoption deadlines approach. Also, the concept of intangible IT assets can be less intuitive than physical assets like buildings or vehicles, requiring more specialized knowledge or training. A 2022 Government Accounting Awareness Report indicated that 30% of finance professionals in public entities weren’t even aware of GASB 96’s effective date, underlining how easily this standard can slip under the radar.

Managing Implementation Across Different Departments

Adopting GASB 96 often calls for a coordinated effort between finance, IT, and operational departments. Finance teams need detailed data about each subscription contract’s duration, renewal options, and service scope, while IT professionals can clarify the technical essentials—such as software specifications and cost structures. Maintaining open lines of communication ensures consistent data collection and reduces the likelihood of inaccurate entries. A 2022 Interdepartmental Compliance Report showed that organizations involving IT stakeholders in financial discussions from the outset cut their GASB 96 implementation timeline by up to 25%, underscoring the value of cross-functional collaboration.

Ongoing Training and Future-Proofing

Finally, staying ahead of potential updates to GASB 96 or related standards can help avoid surprise accounting adjustments down the road. Continuous training—whether through professional workshops, webinars, or specialized courses—keeps finance staff aware of new interpretations and best practices. Some entities create internal knowledge libraries or “centers of excellence” to share tips and real-life applications among team members. In a 2023 Municipal Finance Survey, over 40% of local governments expected more frequent training around new GASB measures, reflecting a growing consensus that regular education is critical to maintaining accurate, transparent financial reports.

Key Steps to Address GASB 96

If your organization is grappling with the nuances of GASB 96, here are some actions to consider:

1. Identify Relevant Contracts: Catalog all subscription-based software or IT services your entity uses—this forms the foundation of compliance.
2. Determine Asset Value: Figure out the subscription asset’s cost by including subscription fees, implementation costs, and other ancillary charges.
3. Establish Subscription Liabilities: Recognize the liability associated with the right to use the IT arrangement over the subscription term.
4. Coordinate with IT Departments: Properly categorizing intangible software assets often requires detailed input from technology teams.
5. Document Amendments and Renewals: Track any modifications to SBITA contracts throughout the year, as these can affect asset or liability values.

By working through these steps methodically, governments can reduce confusion and compile the necessary documentation for auditors or oversight committees.

The Real-World Impact

While some might see GASB 96 as just another administrative hurdle, its practical effects are significant. Clearer reporting on subscription costs can provide stakeholders—like citizens, board members, or bond rating agencies—with a more comprehensive picture of a government’s long-term financial obligations. In a 2023 Transparency in Public Finance Survey, nearly 60% of local government constituents said they trusted public entities more when budgets were explicit about software spending commitments. This sense of clarity matters when it comes time to justify budgets, request additional funding, or simply maintain a solid reputation for responsible governance.

Conclusion

GASB 96 may not grab as many headlines as some other accounting standards, but it’s increasingly relevant in an era where subscription-based IT services form the backbone of government operations. By requiring recognition of subscription assets and liabilities, the measure provides enhanced transparency—yet demands more nuanced work from finance teams. If your entity has subscription-based software contracts, it pays to familiarize yourself with GASB 96’s specifics, establish processes for compliance, and stay updated on any guidance revisions. Understanding the new rules not only safeguards you from potential audit challenges but also strengthens your capacity to deliver transparent, well-managed financial statements.