Capitalizing on SOP 98-1

By Thomas D. Brown, PMP and Eric Silver

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.

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Please also view our webcast, "Surviving the SOP 98-1 Audit," for more best practices in capitalization!

To learn more about how EcoSys EPC supports SOP 98-1, click here to contact EcoSys or read more on our capitalization capabilities.