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Leases, SBITAs, and PPPs

Effective for fiscal year 2022, the Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, establishes a single model for lease accounting based on the principle that leases are financings of the right to use an asset. Lessees will recognize a lease liability and an intangible right-to-use asset, and lessors will recognize a lease receivable and a deferred inflow of resources. GASB 87 applies to leases of capital assets—including buildings, land, and equipment and leases where the agency is the lessee or the lessor. For more information on the GASB 87 implementation and how to prepare for the changes review the following:

Effective for fiscal year 2023, GASB Statement No. 96 establishes a definition for SBITAs and provides guidance on the accounting and financial reporting for such arrangements. The definition and requirements are very similar to those for GASB 87, Leases. At the commencement of the subscription term, a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability should be recognized. The commencement of the subscription term begins when the subscription asset is placed into service. 

Effective for fiscal year 2023, GASB Statement 94 defines public-private and public-public partnerships arrangements (PPP) as well as service concession arrangements (SCA) and availability payment arrangements (APA). It provides specific criteria for meeting those definitions and the accounting and financial reporting requirements for both sides of the arrangements. 

For purposes of this statement, a PPP is an arrangement in which a government contracts with another entity (operator) to provide public services by conveying control of the right to operate or use a capital asset for a period of time in an exchange or exchange-like transaction. An SCA is a specific type of PPP in which the operator is compensated by fees from third parties, but the government retains some control over the services to be provided, to whom they will be provided, and the rates to be charged. The government also is entitled to significant residual interest in the service utility of the capital asset at the end of the arrangement.

In an APA, the government procures a capital asset or service by compensating an operator for activities that may include designing, constructing, financing, maintaining, and operating a capital asset for a period of time in an exchange or exchange-like transaction. In contrast to a PPP, the compensation from the government is based entirely on the asset’s availability and not the actual performance of a public service.

Lease & SBITA Software

Beginning in fiscal year 2024, agencies will transition from using the  Facilities Portfolio Management Tool (FPMT) to DebtBook to track and account for leases and subscription-based IT arrangements (SBITAs) to comply with GASB Statements 87 and 96. The accounting functionality in FPMT will be decommissioned on March 31, 2024.

Overview of Transition to DebtBook and Frequently Asked Questions

Training

Resources

Is the contract a Lease, SBITA, or PPP?

Other OFM guides and resources

GASB literature and resources

Questions

If you have questions or comments, please contact Anna Quichocho at anna.quichocho@ofm.wa.gov.

Last updated
Wednesday, December 1, 2021
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