Re: [scrumdevelopment] GAAP and Agile
- Monday, November 30, 2009, 2:39:29 PM, alisongilles, wrote:
> A somewhat random question, but our Finance team has instructed usThis is not a random question. It is something that I've run into in
> to code all of our hours to one of the following categories:
> Analysis, Design, Build, Test, Post Launch Support.
> Obviously, this feels pretty non-agile. The response to questionsYes. It usually feels like this accounting request pushes us in
> on this has been that this coding follows Generally Acceptable
> Accounting Principles for capitalized/non-capitalized software
> development expenses, and that we don't have a lot of flexibility in
> this. Has anyone experienced this or is anyone familiar with the
> Accounting Principles for software?
non-agile directions. Yet, it is still sadly true that GAAP uses these
categories to decide which time spent on projects can be capitalized.
I do not recommend you "make up" numbers. However, we all know we
do a little analysis, a little design, some building and some testing
each day. On some days we might do some customer support. If your team
is logging time into a time tracking system, simply have them log
the time to the appropriate categories, based on an estimate of how
they spent the time that day.
If your accountants have some confused notion that analysis is a
"phase", and design is a "phase", etc., spend some time with them
explaining about delivering value in very small increments, and that
we really do each of those activities each and every day.
- Good points, Mark. AsI said earlier, the accounting profession seems to be 20 years behind in its accounting practices and internal auditing practices for software development.
Date: Tue, 8 Dec 2009 22:46:31 +0000
Subject: [scrumdevelopment] Re: GAAP and Agile
R&D can not be capitalized, but once a product is deemed feasible, all design, development, and testing can be capitalized.
I have a stinking suspicion that your accountants have been led to believe that "analysis" is R&D, and not simply a high-level form of design.
Have you ever read the accounting rules for software development? It's clear that it was written by a group that was convinced that the waterfall model was the only viable one.
For example, software "maintenance" can not be capitalized, when in fact most "maintenance" is actually adding new features to software, which extends its useful life. Software does not break or wear out like a physical item. The same bits will continue to run indefinitely unless the environment changes. When it does change, modifying the software to run in the new environment *is* adding a new capability.
--- In scrumdevelopment@ yahoogroups. com, "extremeprogrammer" <LanceWalton@ ...> wrote:
> --- In scrumdevelopment@ yahoogroups. com, Ron Jeffries <ronjeffries@ > wrote:
> > Hello, extremeprogrammer. On Friday, December 4, 2009, at 2:24:49
> > PM, you wrote:
> > > Criminy! But can you really capitalize 'analysis' differently from
> > > 'design', for example?
> > When did a government or regulator ever care about that?
> That's what I was getting at. If the government and regulators don't care, then why do the accountants or finance department? If they can't use the discrimination between 'analysis', 'design', etc. to gain some tax break or something, then what do they do with the information?
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