.100 General

This section provides requirements, responsibilities and procedures to identify and capitalize certain subscription-based information technology arrangements (SBITAs) in accordance with Governmental Accounting Standards Board (GASB) Statement No. 96 for James Madison University. SBITAs generally include contracts for cloud-based software, information technology services, cloud-based storage, and similar types of products and services obtained via subscription-based payment structure. University departments should address requests for any software or subscription arrangement through IT Policy & Compliance. Departments should also request any software or subscription arrangements, regardless of the type of funding source, through the Office of Procurement Services.

.200 Definitions

Listed in this subsection are general definitions of key terms associated with SBITAs.

.300 State Requirements - GASB 96 Reporting

As a state agency, the University is subject to accounting standards issued by the Governmental Accounting Standards Board (GASB). GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (SBITAs) became effective for fiscal year 2023. This accounting standard requires that liabilities and/or intangible assets (as appropriate) are established for all material SBITA agreements greater than 12 months in duration (including all options to renew and any potential cancellation periods).

The Office of Financial Reporting is responsible for determining whether an IT agreement is a short-term  or long-term SBITA. Financial Reporting is also responsible for accumulating and reporting the related data and calculations in the University Financial Statements according to "Generally Accepted Accounting Principles," (GAAP) and provides the same information to the State Comptroller for inclusion in the Commonwealth of Virginia’s Annual Comprehensive Financial Report (ACFR).

Upon implementation of the GASB 96 accounting standard, the University adopted a materiality threshold of $50,000 when determining whether an IT agreement qualifies for consideration as a long-term SBITA under GASB 96. In addition, Financial Reporting works closely with the offices of Procurement Services and Information Technology Policy & Compliance on these reviews.

.400 Responsibilities

.410 Department

• Contacts Information Technology Policy & Compliance to define software/technology/storage needs and request authorization to proceed with procuring a solution in accordance with University policy 1202 - Information Systems Implementation & Project Management.
• Confirms that sufficient funds are available within the departmental budget to cover the cost of the agreement.
• If potential purchase is greater than $10,000, contacts Procurement Services to proceed as outlined in University Financial Procedures policy 7005 - Procurement.
• If potential purchase is less than $10,000, moves forward with departmental purchase as outlined in University Financial Procedures policy 7005 - Procurement.
• Provides information, as requested, for recording and reporting SBITAs, to the Office of Financial Reporting.

.411 Information Technology Policy & Compliance

• Prepares and approves of project proposals, determines project classification based on project size and complexity, and meets necessary documentation and oversight requirements. See further details at University policy 1202.
• Communicates with the Office of Financial Reporting periodically throughout the fiscal year to report potential SBITA proposals with an estimated value greater than $50,000.

.412 Procurement Services

• Process all procurements within the policies and procedures set forth in the Rules Governing Procurement of Goods, Services, Insurance and Construction AND the Commonwealth of Virginia Purchasing Manual for Institutions of Higher Education and their Vendors, as further outlined in University Financial Procedures policy 7005 – Procurement.
• Provides access to the contract management system, as requested, to the Office of Financial Reporting for researching contract/agreement details for identified SBITAs. Also provides support to Financial Reporting regarding interpretation of contract language, clauses, addendums, statements of work, etc.

.413 Finance

• Analyzes documentation and determines that a SBITA is short-term or long-term.
• Ensures that the University records all SBITA asset/liability data in University and State Systems for reporting purposes.
• Ensures that all SBITA data and activity is fully and properly disclosed in University’s financial statements according to "Generally Accepted Accounting Principles," (GAAP); provides the same information to the State Comptroller to include in the Commonwealth of Virginia Financial Statements.

.500 Processing Procedures

.510 Department

• Contact IT and complete a Technology Solution Request (TSR) prior to the acquisition, development, or enhancement of a technology system. This requirement applies to third-party systems and services as well as those deployed using on-campus resources; per IT Policy 1202.
• Responsible for project initiation and working with IT on all administrative tasks associated with project selection, classification, and risk assessment necessary for compliance with both university and state requirements.
• Prepares eVA Purchase Requisition for software/SaaS, etc. purchases.
• Completes Accounting Vouchers or other payment documents, if required by the Office of Accounts Payable, for payments as outlined by the purchase agreement or contract (monthly, annual, etc.).
• Confirms SBITA payments for the fiscal year as requested by the Office of Financial Reporting.
• Compares payment transactions posted to the FIS departmental printouts to departmental records. Notifies the Office of Financial Reporting of any differences.

.511 Information Technolgy

• Assist university departments in planning and managing information technology projects, including but not limited to determination of whether the proposed project/purchase complies with University policies and industry best practices.
• Works with the department on all administrative tasks associated with project/software selection, classification, and risk assessment necessary for compliance with both university and state requirements.

.512 Procurement 

• Receives eVA Purchase Requisitions for software/SaaS, etc. purchases.
• Determines the method of procurement and finalizes the eVA purchase order
• If a contract is involved, negotiates and executes the contractual service in accordance with University Finance Procedure 7005 – Procurement.
• Provides information as requested for analysis to the Office of Financial Reporting.

.513 Financial Reporting

• Receives listing of potential information technology services greater than $50,000 in value from IT Policy & Compliance upon request.
• Researches potential SBITA agreements via review of contracts, purchase orders, statements of work, estimates, quotes, payment vouchers, etc.
• Requests additional information as needed from Procurement or the related department. Determines if the SBITA is in-scope for reporting under GASB 96, and whether it is a short-term or long-term agreement.
• Researches payment documents, verifies amounts and dates of payments according to the agreement and/or a certified correct invoice.
• For a major IT contract that qualifies as a SBITA, researches and documents the project timeline, considering the timing of each implementation stage and re-visiting the project over its lifespan. Costs are accumulated, as appropriate (potentially including consultant fees, data migration services, etc.), to be capitalized as part of the initial implementation stage. Multi-year projects may be temporarily capitalized to work-in-progress until the year of go-live.
• Confirms SBITA payments made during the fiscal year with departments.
• Verifies payments against terms documented in the executed agreement.
• Provides feedback and assistance to Fixed Assets and Surplus Property regarding potential SBITA expenditures as well as activity related to capitalizable on-premises software, and any potential implications regarding replacement of on-premises software with a SBITA, phase-out of from one type of software to the other, concurrent use of both types, etc. to ensure accurate reporting.
• Records long-term SBITA intangible assets and any related liabilities (if applicable) at their discounted present value in the annual financial statements.
• Includes disclosures of pertinent information, including but not limited to maturity analyses, variable payments, etc. in the notes to the Financial Statements.

.514 Fixed Assets and Surplus Property (Year-End only)

• Requests information from IT and on-campus departments via year-end memo regarding expenditures related to software during the fiscal year.
• Conducts analysis for prospective capitalizable software other than SBITAs, as deemed appropriate.
• Provides feedback and assistance to Financial Reporting regarding potential SBITA expenditures as well as activity related to capitalizable on-premises software, and any potential implications regarding replacement of on-premises software with a SBITA, phase-out of from one type of software to the other, concurrent use of both types, etc. to ensure accurate reporting.

.515 Accounts Payable

• Processes documents for non-small purchase credit card SBITA payments.

.516 Cash & Investments

• Processes transactions for small purchase credit card SBITA payments.