1. Capitalization of Software Developed In-House Corporate Accounting Financial Management Operations April XX, 2012

2. Overview What is a tangible capital asset? Why capitalize software developed in- house? What rules/guidelines apply? What are the roles and responsibilities of each sector? What process has to be followed? 2 Agenda

3. HoC develops software in-house to address requirement gaps against off-the-shelf software Costs associated with various projects (software development) are not currently tracked 3 Overview

4. To qualify, all criteria below must be met Held for use in production or supply of goods and services Intention of being used on a continuous basis Not intended for sale Useful life over 1 year Minimum overall value of $10,000 4 What is a tangible capital asset?

5. Identification of actual cost of development for future reference Recognizes economic usage by recording expense when the capital assets are used through amortization expense HoC produces Audited Financial Statements and capitalization is a requirement 5 Why capitalize software developed in-house?

6. HoC policy PSAB CICA 6 What rules/guidelines apply?

7. Service Materiel Management Corporate Accounting (FMO) 7 What are the roles and responsibilities of each sector?

8. Upon approval of project, request creation of project code to coding committee (weekly meetings are held) Regular capturing of time spent on the project by various resources (number of hours or days) Coding of non-salary expenditures to project code at the purchase order level Preparation of template provided to capture costs and other critical project information Does a board decide which projects go forward? Can a list be given to CA to assist with creation of project codes? 8 What process has to be followed?

9. Within an organization (Dept ID), many projects may be underway, using the same budget Project codes allow for easy tracking of non-salary expenditures within the financial system from which reports can be produced. They can be used by multiple Dept IDs and are useful especially in cases where the client is also investing time and effort in the project for which costs need to be added to the cost of the asset. 9 Use of a project code

10. Acquisition of base software Salary costs (prorated if necessary) Travel Direct overhead (such as EBP) Incremental office space (if required) 10 What costs are to be included?

11. Senior management salaries (to be completed by consulting HoC policy, PSAB) 11 What costs are to be excluded?

12. DesignDevelopmentImplementation 12 Phases of the project and impact on capitalization