The Governmental Accounting Standards Board proposed new guidance Tuesday on how state and local governments should handle the accounting and financial reporting for cloud computing and similar subscription-based information technology arrangements.
Subscription-based IT arrangements have become increasingly common at state and local government agencies in recent years, GASB noted. While some of the existing GASB literature already deals with on-premise computer software — either internally developed or acquired through perpetual licensing agreements — some of GASB’s constituents have asked about how to properly account for and report on cloud computing and other remote-access forms of software applications and data storage that are subscription based. The absence of guidance on these points led to some inconsistencies in accounting and financial reporting for tech subscription arrangements.
GASB’s new exposure draft of the proposals, Subscription-Based Information Technology Arrangements, effectively would apply many of the provisions already in effect for Statement No. 87, Leases, to subscription-based transactions. The exposure draft proposes to define a subscription-based information technology arrangement, or SBITA, as a contract that conveys control of the right to use a SBITA vendor’s hardware, software or both, including the IT infrastructure, for a period of time in an exchange or exchange-like transaction. State and local governments with SBITAs would recognize a right-to-use subscription asset and a corresponding subscription liability (with an exception for short-term SBITAs with a maximum term of up to 12 months). On top of that, the exposure draft includes proposals related to outlays other than subscription payments, including implementation costs and note disclosures related to a SBITA.
The proposed statement would be effective for fiscal years starting after June 15, 2021, and all reporting periods thereafter. Early application would be encouraged. GASB is asking for comments on the proposal by Aug. 23, 2019.
The IRS has long offered alternative dispute resolution, but says use has declined in recent years, and it hopes to make it more attractive and accessible.
Thomson Reuters announced the release of CoCounsel, a generative solution within Checkpoint Edge meant to help tax professionals with complex research.
