Using PeopleSoft Lease Administration: Supporting the new accounting standard GASB 96

Steven Brenner, CPA of MIPRO, specializes in PeopleSoft Lease Administration. He’s focused on this module since 2013, completing 17 projects over the 10-year timeframe. At Quest’s RECONNECT Dive Deep virtual conference, Steven shared his expertise in a presentation on the new accounting standard of GASB 96.

What is GASB 96?

Governmental Accounting Standards Board (GASB) 96 provides guidance and addresses how the costs and investments for subscription-based information technology arrangements (SBITAs) are accounted for and disclosed by governmental entities. These changes are effective for fiscal years beginning after June 15, 2022.

The great news is that Lease Administration can be configured directly out-of-the-box to comply with GASB 96 with no customizations required. Plus, PeopleSoft’s GASB 96 functionality applies to both new Lease Administration projects and existing Lease Administration implementations. In either case, Lease Administration has you covered for GASB 96.

What’s included in a SBITA contract?

The components of a SBITA contract include:

• SBITA, Subscription Based IT Arrangements (payments) – Capitalize
• SBITA Preliminary Project Stage Costs – Expense as incurred
• SBITA Initial Implementation Stage – Capitalize when software is placed into service
• SBITA Operational Activities – Expenses – Expense as incurred
• SBITA Operational Activities – Improvements – Capitalize

Sample SBITA Contract

For our example SBITA contract, we’ll use the following specifics:

• Subscription Based IT Arrangements – 60 months
• $7,500.00 per month
• $450,000.00 total payments
• Implied Interest Rate – 4%
• NPV $407,243.00
• SBITA Preliminary Project Stage Costs – $8,750
• SBITA Initial Implementation Stage – $95,000
• SBITA Operational Activities – Expenses – $575 per month
• SBITA Operational Activities – Improvements – $12,500 (Incurred 6 months after SBITA placed into service)

Next, we’ll look at the RTU Asset value for the SBITA contract:

SBITA Payments NPV: $407,243.00

SBITA Initial Implementation Stage: $95,000.00

SBITA Improvements (Added 6 months later): $12,500.00

TOTAL RTU – Asset Value: $514,743.00

Below is a look at the General Information tab of a lease in PeopleSoft:

On the next tab, Financial Terms, you’ll find the total lease payments, present value lease payments, and ROU asset cost:

The Journal Entries are created automatically after the Lease is activated and you’ve run your monthly asset processes. At this point, they would look like this:

Configuring Lease Administration for GASB 96

In terms of configuration, you’ll want to work with your auditors to determine exactly what you need. No customizations are required. Configure with these approaches:

• Create new accounts to support SBITA
• Create Asset Management setup to support accounts for journal entries
• Create Lease Administration setup for reporting
• Create Lease Administration Roles for SBITAs if needed
• Create Lease Administration setup to support capitalized SBITA components
• Create Lease Administration setup to support expensed SBITA components
• Create Procedures to support SBITA processing
• Create or Modify existing queries or reports as needed

Reporting

As mentioned, no customizations are required. GASB 96 reporting requirements can all be written with PeopleSoft Query. If you already have GASB 87 queries, you can easily update your queries to accommodate GABS 96.

If you want to learn more about configuring PeopleSoft’s GASB 96 functionality, consider watching the full RECONNECT session recording here: Using PeopleSoft Lease Administration: Supporting the new accounting standard GASB 96.