Crunchafi

GASB 96 - SBITA Term

GASB 96 defines the Subscription Term for a Subscription-Based IT Arrangement (SBITA) as the noncancellable period of government use of IT assets plus any options to extend or terminate reasonably certain to be exercised by either party, excluding cancellable periods where both parties can terminate without consent, and requires assessing contract, asset, market, government, and economic factors at commencement, including consideration of fiscal funding or cancellation clauses only if reasonably certain to be exercised.

GASB 96 - SBITA Term

Subscription Term: The period in which a government has a noncancellable right to use the underlying IT assets, plus:

  • The government’s option to extend if it is reasonably certain to be exercised
  • The government’s option to terminate if it is reasonably certain it will not be exercised
  • The SBITA vendor’s option to extend if it is reasonably certain to be exercised
  • The SBITA vendor’s option to terminate if it is reasonably certain it will not be exercised

Periods where the government and SBITA vendor both have an option to terminate without permission from the other party are considered cancellable and are excluded from the term.

Fiscal funding or cancellation clause: This clause allows a government to cancel a SBITA—typically annually—if the government did not appropriate the funds for the subscription payments. This type of clause should affect the subscription term only if it is reasonably certain to be exercised.

At commencement, assess all relevant factors:

  • Contract-based factors
  • Underlying IT asset-based factors
  • Market-based factors
  • Government-specific factors
  • Economic incentives