Accounting Software Assets

Abstract

Enterprise Information Technology Systems are major corporate assets upon which corporate operational health is heavily dependent. FASB's Statement No. 86 (SFAS 86) and AICPA's Statement of Position 98-1 (SOP 98-1) are the current accounting standards dealing with how these assets appear on corporate financial statements. However, the techniques, models and concepts used by these standards have not kept pace with technology's advancements, such as commonly used models for creating, enhancing and evolving IT assets. Complexity of these systems has also risen in tandem with Information Technology ubiquity. Thus accounting's role in providing accurate, up-to-date and usable data and information for IT systems' management is impaired while corporate management is increasingly in need of information for which accounting is the only practical source.

This article discusses how new technology concepts can be leveraged to provide accounting with better quality information, both more accurately and timelier. It presents a quantitative model for the valuation of IT systems and their amortization.

Keywords: Software management, software assets management, software auditing, software capitalization, business valuation with software

JEL Classification: M41, M44, G12