This blog addresses a new exposure draft issued by GASB relating to accounting and financial reporting for subscription-based information technology arrangements (SBITAs). Cloud computing arrangements and other hosting type services have become increasingly more prevalent in the government environment. There is currently no explicit guidance in this area. The exposure draft would apply many of the concepts in GASB 87, Leases, to SBITAs. The standard addresses the definition of a SBITA, as well as recognition and subsequent measurement guidance. It also includes guidance related to upfront implementation costs. Comments are due by Aug23. 

What is a subscription-based information technology arrangement? You’ve probably been calling it a “cloud computing arrangement. What follows is the proposed GASB standard, issued May 13, because currently there is no explicit accounting or financial reporting guidance for SBITAs.  

“It sounds like a lease, and guess what? It’s going to look a lot like a lease,” Galasso says. 

FASB did address this issue in 2015 with FASB ASU 2015-05. 

“They’re taking the guidance that they already had pretty much for leases and they’re applying it to cloud computing arrangements, who are out of scope of the standard because GASB 87 only applies to assets that are non-financial assets and they exclude explicitly intangible assets,” Galasso says. It also follows FASB’s ideas for what can be capitalized into the subscription asset and what cannot based on the phase of the implementation costsSo, not the monthly or annual fees, but those up-front fees that you might incur to be able to get to the process and get the technology up and running.” 

The proposed effective date would be for fiscal years beginning after June 15, 2021, and all reporting periods thereafter. Earlier adoption would be encouraged. 

You can read the GASB exposure draft here. 

Comments on the exposure draft should be addressed to the Director of Research and Technical Activities, Project No. 38, and emailed to 

What questions do you have? Send your questions to 

SCACPA is excited to partner with Galasso Learning Solutions and the Genuine Learning Blog for real-time A&A updates and answers for SCACPA members. With over 15 years of experience in the accounting profession, Melisa Galasso designs and facilitates courses in advanced technical accounting and auditing topics, including not-for-profit and governmental accounting. She closely monitors regulatory bodies for changes in auditing and accounting guidance and serves as a subject matter expert in implementing the updated guidance. 

Melisa was a speaker on audit topics at SCACPA’s 2019 Spring Splash. Look for her to return this November for Fall Fest as well as many seminars and rebroadcasts.