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The Governmental Accounting Standards Board (GASB) has issued an exposure draft, Implementation Guidance Update-2023, that adds nine new questions and answers, and one amendment to an existing Q&A. It covers leases, subscription-based information technology arrangements (SBITA), and accounting changes.


New guidance addresses—

  • Whether a lease is a short-term lease
  • Lessee and lessor recognition and measurement for other-than-short-term leases
  • Lease payments required to be paid in a foreign currency

Concerning recognition, revenue resulting from deferred inflows of resources should be classified by business-type activities as operating or nonoperating based on the purpose of the lease, the nature of the activity, and the government’s policy defining operating revenue.

Regarding lease terms, the amended Q&A clarifies that the period covered by either a lessee or a lessor option to terminate is not excluded from the lease term when it is reasonably certain that the lessee will not terminate the lease due to large cancellation penalties.


The proposal includes two Q&As relating to SBITAs. The first clarifies that a licensing agreement that automatically renews until cancelled is not considered to be a perpetual license. The second clarifies that the term of a SBITA begins when the initial implementation stage is complete and ends when the SBITA contract ends.

Accounting Changes

The final Q&A, which is generally not applicable to colleges and universities, states that the close-out and termination of a capital projects fund is not considered a change to or within the financial reporting entity.

All of this guidance would become Category B GAAP when issued. Category B GAAP includes GASB technical bulletins, GASB implementation guides, and AICPA literature cleared by GASB. With the exception of the accounting changes Q&A, all items would be effective for fiscal years beginning after June 15, 2023. The accounting changes Q&A would be effective upon implementation of Statement 100.

Comments on the exposure draft are due January 20, 2023. NACUBO will comment and encourages public institutions to also comment or share feedback for inclusion in NACUBO’s letter.


Chris Leach

Accounting Policy Analyst


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