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Capitalizing on SOP 98-1
By Thomas D. Brown, PMP,
Director of Professional Services, and Eric Silver,
Solution Architect, EcoSys
www.ecosysmgmt.com
Abstract
Since its arrival ten years ago, the AICPA’s
SOP 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained
for Internal Use,” has impacted how finance
departments account for the adventures of
the IT department. Although SOP 98-1 set a
standard with specified guidelines, labor
capitalization is still open to subjective
interpretation. The response has been to
involve the Finance department or IT
financial analysts at various phases of the
project; they must be on hand to validate
which costs will be considered expense, and
which can be capitalized. While these
evaluations are necessary to comply with
SOP 98-1, the execution is far from optimal,
with one result that should make any
financial analyst’s blood boil: current
capitalization processes only add more
unnecessary cost. The purpose of this white
paper is to discuss the current methods being
used, and determine how they can be
improved upon to make the capitalization
process as effective as it can be.
View Complete White Paper
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