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Re: [scrumdevelopment] GAAP and Agile

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  • daswartz@prodigy
    ... This is not a random question. It is something that I ve run into in the past. ... Yes. It usually feels like this accounting request pushes us in
    Message 1 of 34 , Dec 1, 2009
      Monday, November 30, 2009, 2:39:29 PM, alisongilles, wrote:

      > A somewhat random question, but our Finance team has instructed us
      > to code all of our hours to one of the following categories:
      > Analysis, Design, Build, Test, Post Launch Support.

      This is not a random question. It is something that I've run into in
      the past.

      > Obviously, this feels pretty non-agile. The response to questions
      > 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?

      Yes. It usually feels like this accounting request pushes us in
      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.


      doug swartz
    • Roy Morien
      Good points, Mark. AsI said earlier, the accounting profession seems to be 20 years behind in its accounting practices and internal auditing practices for
      Message 34 of 34 , Dec 8, 2009
        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.
         
        Regards,
        Roy Morien
         

        To: scrumdevelopment@yahoogroups.com
        From: woyna@...
        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.

        Mark

        --- 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?
        >
        > Regards,
        >
        > Lance
        >




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