The Governmental Accounting Standards Board released more implementation guidance to clarify earlier advice on how to account for subscription-based technology arrangements for state and local governments.
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The additional guidance in the exposure draft includes an extra question and answer on cloud computing arrangements, and if it's approved as additional guidance, it will be added to the previously exposed questions and answers in the final Implementation Guidance Update for 2023.
According to the proposed guidance, a cloud computing arrangement may or may not meet the definition of a subscription-based IT arrangement. GASB noted that cloud computing arrangements have three common deployment models: software as a service, platform as a service, and infrastructure as a service.
"All three deployment models provide the customer with the right to use a combination of another party's IT software and tangible capital assets," GASB noted. "The definition of a SBITA requires, in part, that a contract convey control of the right to use another party's IT software, alone or in combination with tangible capital assets (the underlying IT assets). Therefore, as part of its determination of whether a cloud computing arrangement meets the definition of a SBITA, a government should evaluate whether the contract conveys control of the right to use the underlying IT assets in accordance with Paragraph 7 of Statement 96."
GASB is asking for feedback on the proposal by March 10, 2023. Comments can either be submitted in writing or through an
