[ACFR-contacts-news] Update on SBITA Prepayments

[HAMILTON Robert W * DAS]

Hello ACFR Contacts,

During our recent training on GASB Statement No. 96 Subscription Based Information Technology Arrangements, we had several exercises to hopefully help in the understanding of the standard, one of which covered the treatment of payments made in advance of the SBITA being placed in service. The exercise was built off of paragraph 26 of the standard, which states the following: "Payments before the commencement of the subscription term associated with the SBITA contract made to the SBITA vendor, as well as payments made for the capitalizable initial implementation costs before the commencement of the subscription term, should be reported as a prepayment (an asset)...." After the training, I submitted a technical inquiry and the GASB staff indicated that a "prepayment" in this context is not a prepaid expense, but rather it is construction in progress (CIP). As a result, we've updated Exercise #2 with revised T-code guidance, and that guidance is consistent with other CIP transactions. In addition to the exercise, the slide 22 of training slides has also been updated. Here's a link to our Training and Resources Page, Accounting and reporting training, that includes the updated slides and exercise: https://www.oregon.gov/das/Financial/Acctng/Pages/Training.aspx. We're finishing our quality control of the draft OAM, which will incorporate this treatment, and will be placed out for comment soon.

Hopefully by sending this out before June 30, it doesn't result in any revisions of entries agencies have made, and I'm sorry if this causes any problems.

My sincere thanks to Sangit Shrestha of Department of State Lands for bringing this to my attention initially.

If you have any questions, please contact your SARS analyst.

Rob

Robert W. Hamilton, CPA
Statewide Accounting and Reporting Services Manager
Chief Financial Office
Department of Administrative Services
Cell: (971) 719-3031
http://www.oregon.gov/DAS/financial/acctng

Data Classification: Level 1 - Published

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