Technical & training

Impact of IGRAP 16 (2014): Accounting for Intangible Assets – Website Costs

September 21, 2014

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In the technological age, most public sector entities have incurred material costs for the establishment and upgrading of their websites, which are used to relay service information, to publish performance and financial information for accountability and even used as platforms of service delivery. In the application of accounting requirements of GRAP 31: Intangible Assets, and previously GRAP 102, entities had to consider how to correctly account for these costs incurred.

In 2012, the Accounting Standards Board (ASB) issued an Interpretation of the Standard of GRAP on Intangible Assets (Website Costs) (IGRAP 16) which became applicable from the 2013/14 annual financial year (AFS), to provide clarification to preparers and users of AFS on the accounting considerations pertaining to internally generated intangible assets applicable to website costs.

IGRAP16.08 states that an entity’s own website (i.e. not for sale or lease) that arises from development and is for internal or external access is an internally generated intangible asset that is subject to the requirements of GRAP 31: Intangible Assets. Ducharme prepared a summary of IGRAP 16 and the impact of the implementation thereof on public sector entities applying GRAP in their considerations as to whether internally generated website costs should be capitalised or expensed, as to:

Internal access to the website vs External access to the website
Development of website vs Operations of website
Own website (held for operations) vs Held for sale in normal operations/lease
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