GASB proposes guidance for subscription-based IT arrangements

by | May 24, 2019 | Uncategorized | 0 comments

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GASB proposes guidance for subscription-based IT arrangements

State and local governments would account for subscription-based information technology arrangements under many of the same provisions they use for lease accounting under a proposal published Tuesday by GASB.

Subscription-based IT arrangements have become increasingly popular in recent years, and stakeholders have asked GASB about the proper accounting for, and reporting of, cloud computing and other remote-access software application and data storage that are subscription-based.

Existing GASB guidance addresses on-premise computer software that is either internally developed or acquired through perpetual licensing arrangements. Subscription-based IT services are a category unto themselves, however, and the guidance issued Wednesday is meant to reduce confusion over the accounting for these services.

The exposure draft proposes applying many of the provisions of GASB Statement No. 87, Leases, to the subscription-based arrangements. GASB proposed:

The proposal also addresses outlays other than subscription payments, including implementation costs and note disclosures related to a subscription-based IT arrangement.

The proposal would take effect for fiscal years beginning after June 15, 2021, and all reporting periods thereafter. Early application would be encouraged.

Comments can be submitted through Aug. 23 by emailing director@gasb.org.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

Research & References of GASB proposes guidance for subscription-based IT arrangements|A&C Accounting And Tax Services
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