Software Licenses Project

FASAB Contact: Ricky A. Perry, Jr., perryra@fasab.gov, 202-512-5720

Project Objective:

In light of forthcoming rescissions to SFFAS 6, Accounting for Property, Plant, and Equipment, this project will clarify the accounting treatment for software licenses once SFFAS 54, Leases, and its related amendments to existing software licenses guidance become effective.

History of Board Deliberations:

June 24 – 25, 2020

At the June 2020 meeting, the Board discussed staff and working group findings and recommendations regarding the next steps for the project. The software licenses working group explored the drawbacks and opportunities to develop a Technical Bulletin (TB) on the accounting treatment for software licenses. In August 2019, the Board agreed to pursue a TB due to pending rescissions to existing guidance resulting from SFFAS 54.

The Board agreed to forgo further development of the TB for reasons set forth by staff research and the working group’s feedback. As a result, the software licenses project was tabled, and staff will prepare educational materials and potential options for the Board to explore undertaking projects on intangible assets and subscription-based informational technology arrangements on its technical agenda.

Briefing materials – TAB C

August 28-29, 2019

The Board approved staff’s recommendation to develop a Technical Bulletin (TB) to clarify the accounting treatment for software licenses. The Board agreed that issuance of a TB is necessary given the pending rescissions to paragraphs in existing guidance—SFFAS 5, Accounting for Liabilities of the Federal Government, and SFFAS 6, Accounting for Property, Plant, and Equipment—that take effect in fiscal year 2021 as a result of SFFAS 54.

Board members agreed that the intent of the rescissions, which are currently used by the community as criteria for capitalizing and amortizing software licenses in a manner consistent with tangible assets that exceeds capitalization thresholds, was not to discontinue current practice. The Board agreed that a TB is the appropriate mechanism for addressing the matter.

During these discussions, Board members generally agreed that future technical agenda-setting deliberations should consider opportunities to address software issues and guidance for intangible assets more broadly. Members asked that staff conduct preliminary research on such opportunities.

Issue Paper for August 28, 2019 – Tab G