ACFR FY 2023 Final - Flipbook - Page 121
FINANCIAL SECTION
City of Eustis, Florida
NOTES TO FINANCIAL STATEMENTS
Note 15 - Subscription-Based Information Technology Arrangements (SBITA)
GASB 96 deones a SBITA as a contract that conveys control of the right to use another party9s information technology software, alone or in combination with tangible capital assets, as specioed in the
contract for a period of time in an exchange or exchange-like transactionÿ
The City of Eustis is using SbITAs in various departmentsÿ The City uses various software solutions to
streamline operations, enhance service delivery, enhance citizen engagement, and improve overall
efociency in managing City resources and services. It allows for more effective decision-making
and operational improvements across different departmentsÿ
GASB 96 has an effective adoption date of October 1, 2022. All onancial statements dated September
30, 2023, and forward need to follow the new regulationÿ Contracts that existed at the adoption date
and remain in force would use the facts and circumstances on October 1, 2022, to record the initial
transactionÿ Those entered into after that date will use the commencement date of the subscription
termÿ
Under GASb 96, governments should recognize a right-to-use subscription asset (an intangible asset)
and a corresponding subscription liability on their balance sheet when they enter into a SbITAÿ The
right-to-use subscription asset represents the City9s right to access IT services, while the subscription
liability represents the City9s obligation to make future payments for the servicesÿ The City should
amortize the right-to-use subscription asset over the shorter of the SbITA term or the useful life of
the underlying IT infrastructureÿ The amortization expense should be recognized as an outflow of
resources (expense) in the statement of activitiesÿ Additionally, interest expense should be recognized on the subscription liability, following the effective interest methodÿ
Signiocant Provisions:
1ÿ Subscription Term - The subscription term is deoned as the period during which a government
has a noncancelable right to use the underlying IT assets, plus the following periods, if applicable:
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periods covered by the government9s option to extend the SbITA when reasonably certain the
government will exercise this optionÿ
periods covered by the government9s option to terminate the SbITA when reasonably certain the
government will not exercise this optionÿ
periods covered by the SbITA vendor9s option to extend the SbITA when reasonably certain the
SbITA vendor will exercise this optionÿ
periods covered by the SbITA vendor9s option to terminate the SbITA when reasonably certain
the SbITA vendor will not exercise this optionÿ
periods where both the government and the SbITA vendor have an option to terminate the SbITA
without permission from the other party (or if both parties have to agree to extend) are cancelable
periods and are excluded from subscription termsÿ
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Annual Comprehensive Financial Report | September 30, 2023
121
