Anyone get a capital grant from a CEB for software development?

UPDATE2: Got the grant - see full post here.

UPDATE - met with the CEB today and discovered that the C&AG (Comptroller and Auditor General - audits Semi-State spending) instructed the CEB(s?) a couple of years ago to capitalise the cost of their websites.

So this game was over before I got there :-). Will be interested if we now hear of any businesses who meet the criteria underneath having been refused grants from CEB's on the grounds of website costs not being capital?

keith

Question for you? Meeting Kilkenny CEB next week to make the case that the capital grant which they give (normally given for tangible items such as plant and equipment with life spans in excess of one year) should also be capable of being given for the development of the software backend for an online service.

Anyone know of a case where a capital grant was given by a city or county enterprise board for anything like this - the development of an intangible?

UPDATE: Thanks to Anthony Galvin who left a comment referring to an international accounting standard. I did a small bit of searching (in a previous life I was an accountant) and came across a Financial Reporting Council page and document on this.

Extracts from this:

....the remaining costs of Website development ... could give rise to an asset, which should be capitalised if the relationship between the expenditure and the future economic benefits is sufficiently certain.

...In the UITF’s opinion, this would be the case only if the Website was capable of generating revenues directly, for example by enabling orders to be placed.....

...other Website development costs should be capitalised as tangible fixed assets, in accordance with the requirements of FRS 15 ‘Tangible Fixed Assets’.

Capitalised Website development costs should be depreciated over their estimated useful economic life, which should be selected and reviewed each period in accordance with the requirements of FRS 15.  Given the rapid rate of technological innovation, the useful economic life of a Website is likely to be short.  Further, where the design or content of a Website requires more frequent replacement than the Website as a whole, it may be appropriate to select a depreciation period for the cost of the design or content that is shorter than the depreciation period selected for the remainder of the asset.

My take on the above - your backend costs are explicitly identified as being tangible fixed assets if planning and design/content costs are excluded and if the site to which the backend is applied will generate revenue.

That is a great document to have to hand for my meeting next week - if I come across anything else or examples of precedent I will update this.

thanks, keith

Comments

[Anthony Galvin]

Keith,

Found your post by way of @conoro on Twitter.

I think your case has some merit. We have recently had our accounts audited and the same old argument comes up over whether software is an asset or an expense. Especially Web Sites.

However, the question has been solved by the International Accounting Standards. There is an FRS on this issue which states clearly what types of Web Development are allowable as Capital V Expenses.

If you need more info, I can put a 30 Second question to my accountant. Anything more than that and my bill will jump!!

Hope this helps,
Ant

[MJ]

Best of luck. Change the world! World of CEB's, that is...

[Antoin O Lachtnain]

I find it hard to believe that the local ceb will be willing to invest in a venture like this, not because they are conservative, but because it is difficult for them to evaluate the possible success of your software development. Maybe if you can give them confidence about this, you can do better.

Is there any way you can buy the software you need, or a large part of it, rather than writing the whole thing? There is no shame in buying software. Maybe you could buy something from someone in another part of the world? It would make it a lot easier to pitch to the CEB and to be honest, it could give you a greater possibility of success.

Anyway, good luck with it. I hope you get your money, somehow!

best,

Antoin.

[John]

Nice bit of research, very interesting. Be sure to let us know how your argument is received by the CEB.

Best of luck,
John

[Keith bohanna]

@MJ thanks!
@Antoin the discussion with the CEB is being backed up with a comprehensive business plan. The issue is as identified: establishing a new precedent. You are right that there is no shame in purchasing software from elsewhere, it is just not relevant here.
@John, outcome will be interesting :-)

Keith

[Keith bohanna]

@Anthony thanks for the tip on that standard, very useful!

Keith