Skip to content Menu

The Governmental Accounting Standards Board (GASB) has issued an exposure draft (ED), Implementation Guidance Update-2023, that adds nine new questions and answers (Q&A), and one amendment to an existing Q&A. The areas covered are leases, subscription-based information technology arrangements (SBITA), and accounting changes. NACUBO submitted a comment letter requesting changes to one of the Q&A items.

Question 4.7 of the ED addresses a software licensing agreement that automatically renews until cancelled. The proposed guidance states that such an agreement is not considered to be a perpetual license; rather, it is considered to be a SBITA.

NACUBO expressed concern that GASB’s answer leaves open the question of whether the renewal periods should be included in the subscription term. We suggested that the question be modified to indicate that both the government and the vendor must have an option to terminate the SBITA at each renewal date and provide a reference to the applicable paragraph of the final standard.

In addition, the comment letter suggests that the answer to Question 4.7 be modified to include a reference to the paragraph of the final standard that provides guidance on the factors to consider when determining the likelihood that the renewal option will be exercised.

Contact

Chris Leach

Accounting Policy Analyst

202.861.2566


Related Content

HEERF 2023 Annual Reporting Opens in March

The reporting period for the 2023 HEERF annual report (covering calendar year 2022) is scheduled to begin on March 6, 2023, and will run through March 24, 2023. There are numerous notable changes from last year’s reporting.

ED Issues 2021 HEERF Performance Report

A new report from the Department of Education highlights ways institutions used $39 billion in HEERF funding to support their students and campus operations.

NACUBO Requests Changes to GASB’s Proposal to Update Implementation Guidance

We suggested changes to a new Q&A GASB added to its new implementation guidance for leases, subscription-based information technology arrangements, and accounting changes and error corrections.