What is SOP 98-1?

SOP 98-1 describes the allocation of project expenses for internal software development or purchase to either expense or capitalizable categories. Organizations can capitalize on the development of internal software by managing the project with Tracker Suite for Lotus Notes / Domino, TrackerOffice for Microsoft Outlook / Exchange, or TrackerSuite.Net for the Web.

SOP 98-1 defines three phases to projects, a preliminary phase of assessment and planning, the development phase of actual design, installation and testing, and finally the post implementation and operation phase, where the internal software is deployed and adopted through the organization. While internal and external costs accrued during the first and third stages must be expensed against current operation, SOP 98-1 allows the costs involved in the development phase to be capitalized.

Capitalizing on SOP 98-1 using Tracker

Tracker Suite’s project, time, expense and purchase databases simplify the organization’s ability to capitalize on SOP 98-1. For example, an organization wishing to leverage SOP 98-1 uses Project Tracker to create a new internal project. Using Project Tracker, each phase of the project is clearly defined and tracked.

Tracker’s applications for time reporting (Time Tracker), expense tracking (Expense Tracker) and purchasing (Purchase Tracker) are tied to the Project Tracker database. This integration improves the accuracy of internal project billing as well as simplifying its accounting.

SOP 98-1 does not allow general and administrative costs (or overhead expenses) to be included in the capitalized cost of the internal project, a restriction which can make time reporting problematic. However, Time Tracker allows users to define billable hours not only by project and task, but by activity and descriptions as well, a function which simplifies tracking applicable SOP 98-1 items.