GASB 96 turns software subscriptions into a public accountability issue. Governments must identify SBITAs, record right-to-use subscription assets and liabilities, classify costs by stage, and disclose obligations clearly. For city and county leaders, compliance is not paperwork. It is disciplined financial control, visible to council, auditors, and the citizens they serve.

The Accountability of Digital Commitments

Local government now runs on subscriptions. Finance, permitting, payroll, utility billing, public works, records, payments, inspections, and citizen portals often depend on software the government does not own. GASB 96 names that reality.

A Subscription-Based Information Technology Arrangement, or SBITA, is a contract giving a government the right to use a vendor’s IT software for a defined period in an exchange transaction. Under GASB 96, most SBITAs create two things:

• A right-to-use subscription asset, reported as an intangible asset.
• A corresponding subscription liability, measured at the present value of expected subscription payments.

This matters because subscription software is no longer just an operating line item hidden in the flow of annual invoices. It is an obligation. It is an asset. It is a claim on future budgets.

Budgets are tight. Timelines are shorter. Citizens expect more.

The question for city and county executives is not whether software subscriptions are necessary. They are. The question is whether the government can see them, measure them, and explain them with confidence.

The Discipline of Cost Classification

GASB 96 requires governments to look beyond the invoice and examine the work behind the system. Costs must be grouped by activity, not by habit.

• Preliminary Project Stage: expense costs for evaluating options, defining needs, and selecting a vendor.
• Initial Implementation Stage: generally capitalize costs needed to place the subscription asset into service.
• Operation and Additional Implementation Stage: expense ongoing maintenance and operations unless specific capitalization rules are met.
• Training: expense as incurred, no matter when it happens.
• Short-term SBITAs: expense subscription payments when the maximum possible term is 12 months or less.

This is where many agencies feel the strain. We know the weight of legacy systems; we understand the cost of the status quo. Contract terms may be scattered. Implementation costs may sit in different departments. Renewal options may be known to staff but not clear in the file.

GASB 96 asks leaders to bring order to that work. Not for accounting theory. For public trust.

The Path from Compliance to Confidence

A practical GASB 96 response should be phased, direct, and owned by both finance and operations.

1. Inventory every software subscription contract.
2. Identify which arrangements meet the SBITA definition.
3. Confirm the subscription term, including likely renewal or termination options.
4. Separate subscription payments from service, support, and other components.
5. Classify implementation costs by stage.
6. Calculate the liability using the vendor rate or the government’s incremental borrowing rate.
7. Record the subscription asset and amortize it over the subscription term.
8. Prepare required note disclosures for assets, accumulated amortization, payments, principal, and interest.

The future state is plain.

A government that knows its obligations.
A government that honors its statements.
A government that gives council, auditors, and citizens a clear view of the public purse.

GASB 96 is more than a reporting rule. It is a call to govern digital commitments with the same discipline used for debt, capital assets, and public infrastructure.

Lead the work before the audit demands it. The machinery of public trust depends on what leaders choose to see, measure, and make clear.