Fwd: Year 2000 Compliance JohnR999 14 Mar 1998 15:46 EST

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Dear resadm-l-ers,

I have been, up to now, a lurker on this list and forwarded an email to
someone who is on a diiferent list I am subscribed to.  His name is *Doc* Don
Taylor and his email address is <xxxxxx@visi.net>.  His response is below.

JR

John Rodrigues
xxxxxx@aol.com

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To: JohnR999 <xxxxxx@aol.com>
From: "'Doc' Don Taylor" <xxxxxx@visi.net>
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 I may have some facts and opinion relevant to some of the questions:

1.  How to account for the repair costs.

 Way back in 1996 the Emerging Issues Task Force (EITF) of the
Federal Acounting Standards Board (FASB) ruled that in general
costs related to fixing the Y2k problem must be expensed.

 FASB (EITF Discussions) - Issue 96-14: ACCOUNTING FOR THE
 COSTS ASSOCIATED WITH MODIFYING COMPUTER SOFTWARE FOR THE
 YEAR 2000 - Paragraph #5 "...At the July 18, 1996 meeting,
 the Task Force reached a consensus that external and internal
 costs specifically assocaited with modyfying internal-use
 software for the year 2000 should be charged to expense as
 incurred."

 While you may argue that this is equipment, not software, it
can also be argued that it is the internal software, not the actual
equipment, that has to be changed.

 There is reportedly two FASB documents related to this, as
reported in this post from my archives:

 The FASB EITF's summary Issue: 96-14 identified below is
 actually one of TWO difinitive FASB documents that pertain
 to Y2K accounting practices.  The other was drafted by FASB's
 Accounting Standards Exexutive Committee (AcSEC).  It was
 released as a proposed Statement of Position on 12/17/1996
 (I'm in the date expansion camp <g>) and is entitled
 "Accounting for the Costs of Computer Software Developed or
 Obtained for Internal Use."  Page 14, Paragraph 24 of the
 proposed SOP:

 <snip> "Costs of significant upgrades and enhancements to
 internal use computer software should be capitalized if it is
 probable that those expenditures will result in significant
 additional functionality or a significant extension of the
 software's useful life." [The document then specifically states
 that "This SOP does not change the conclusions reached in
 EITF Issue No. 96-14"]

 The bottom line pertaining to Y2K costs:

 1.  EITF's 96-14 defines in-place Y2K renovations as
 normal maintenance and mandates that the costs for such
 must be expensed as incurred.

 2.  AcSEC's SOP declares that software which is intended for
 internal use (i.e., not for resale), whether developed from scratch
 of acquired from a vendor, should be capitalized and amortized
 over the software's useful life.  So if you achieve Y2K compliance
 by rewriting systems or buying packaged solutions, you can
 capitalize.

 3.  AcSEC's SOP, as identified above, also provides "wiggle room"
 for capitalization if you significantly enhance your systems or
 significantly extend their useful life during Y2K renovation.
 But just doing an in-place renovation does not fall under FASB's
 definition of "significantly extending useful life."  So if you
 add lots of new features or re-architect (e.g., convert your IMS
 data to DB2, re-architect to Client/Server), you can almost
 certainly capitalize.

 Your finance people need to be all over this issue.

 I am not an accountant but a concerned Y2k management consultant.
My personal recommendation is to have your accounting people involved,
and make sure they are aware there are specific guidelines for Y2k
accounting. (The IRS has their own as well.) If you need to contact
FASB, my archives show the FASB contact is:

 Timothy Lukas
 FASB
 401 Merritt 7
 P.O. Box 5116
 Norwalk, CT 06856

2.   As to who should carry the burden of making the equipment compliant,
your best hope is to try to make this a cooperative effort. Both the
awarding agency and the institute benefit from the proper and continued
use of the equipment, without which the project may be endangered.
However, I do not know if there are any specific guidelines on this.

3. Who should lead the charge to assure that sponsored research
activities and deliverables will not be adversely affected by the year
2000?

 Each institution/organization should have a Year 2000 Program
Manager. This person should *not* be from the IT department as this
is both a management and technology issue. They should be someone
with sufficient authority to cover all parts of the organization.
In larger organizations you should consider having a working group
of representatives from all departments/divisions to ensure you get
subject matter expertise for each. But definitely avoid ego and
political battles - they are counter-productive.

 Hope this helps. Some educational institution reference sites:

 o   <http://main.ouhsc.edu/2000/>
 o   <http://www.asu.edu/it/fyi/computingnews/issues/Fall97/
 articles/research_y2k_1.html>
 [put both lines together to get full URL]

Doc

At 12:06 PM 3/14/1998 EST, you wrote:
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>Another email from that thread...
>
>JR
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>Reply-To: Research Administration Discussion Group
>              <xxxxxx@health.state.ny.us>
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>From: "Higginson, David A" <xxxxxx@EXCHANGE.UAMS.EDU>
>From: Research Administration Discussion Group
>              <xxxxxx@health.state.ny.us>
>X-From:       "Higginson, David A" <xxxxxx@EXCHANGE.UAMS.EDU>
>Subject:      Re: Year 2000 Compliance
>X-To:         Research Administration Discussion Group
>              <xxxxxx@albnydh2.health.state.ny.us>
>To: Multiple recipients of list RESADM-L <xxxxxx@health.state.ny.us>
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>We have been going through the yr 2000 process and identifying equipment
>that will need to be replaced, retired, or updated in order to handle the yr
>2000 issue. The interesting issue to me is who should carry the burden of
>making a piece of research equipment yr 2000 compliant. If it was bought
>using federal funds from an award that will still be active on 1/1/2000
>should the it be charged to the award, or picked up by the institute? Is
>this an allowable expense for the indirect cost calculation? Also, should
>you capitalize such an expense based on the fact that value is being added
>that will last for x years, or do you treat it like a repair and expense it
>?
>
>-David
>
>David Higginson, ACMA
>Administrative Director
>Arkansas Children's Hospital Research Institute
>Tel: (501) 320-3757
>Fax: (501) 320-3547
>Email : xxxxxx@exchange.uams.edu
>WWW : http://achri.ach.uams.edu
>
>-----Original Message-----
>From: Suzanne Huard [mailto:xxxxxx@UNHN.UNH.EDU]
>Sent: Friday, March 13, 1998 6:11 AM
>To: Multiple recipients of list RESADM-L
>Subject: Year 2000 Compliance
>
>
>  Those of us at UNH involved with administrative computer systems have been
>  hard at work ferreting out and fixing computer issues relating to the year
>  2000 and feel that we are in pretty good shape wrt administrative
>computing.
>  We are somewhat concerned about broader implications associated with
>research
>  activity itself, and particularly with our obligations for sponsored
>research
>  as outlined in NSF Special Notice No. 120
>  (http://www.nsf.gov/pubs/1997/iin120/iin120.htm). As the document
>outlines,
>  the danger could be lurking in electronic devices, laboratory equipment,
>  software running on mainframes or on individual work stations, etc.
>
>  What, if anything, have you done to assure that sponsored research
>activities
>  and deliverables will not be adversely affected by the year 2000.  Who has
>  been leading the charge on this issue?  Faculty advisory groups?
>Sponsored
>  research office?  VP for Research?  VP for InfoSystems/Technology?  Do you
>  have an insitutional plan/checklist for addressing Year 200 compliance?
>(If
>  so, and if it is available on the web, the URL would be most welcome).
>
>  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>  Suzanne Huard
>  Mgr, Information Systems & Technology              Tel:   603-862-2005
>  Office of Sponsored Research                       Fax:   603-862-3564
>  University of New Hampshire
>  Durham, NH  03824                      E-Mail:   xxxxxx@unh.edu
>  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Hampton Roads 2000 - USA
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 What Are These Things We Call Banks? (Part One)
 <http://www.y2ktimebomb.com/Industry/Banking/doct9808.htm>
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