It can be very clearly seen from their annual report that over a...

It can be very clearly seen from their annual report that over a period of just over two years they built computer software and as required when a project is complete and capable of operating in the manner intended transferred this from work in progress to computer software ($2.6m in FY15 and $11.1m in FY16). On transfer they correctly commenced amortising those assets in line with their policy (straight line over 2-15 years depending on the piece of software). One shouldn't write off costs progressively, rather a trigger under the impairment rules would require a write-off. In this case they have identified that some of the capital costs relate to modules that aren't being used.

In my mind the real questions to ask are two fold and aren't entirely focussed on the accounting reflex:
- when developing an intangible asset (self developed in large part other than I expect licences) there is a requirement during the build phase to perform an impairment test (paragraph 10 of AASB 136 states: "Irrespective of whether there is any indication of impairment, an entity shall also: (a) test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount.") Why didn't that impairment test identify that modules being built weren't going to be used and expense directly to the P&L?
- secondly and more importantly from an operational perspective is why did they spend money building modules they were never going to use (given these assets appear to clearly have been constructed in the last couple of years, not an unreasonable question to ask)?

Once they are at the current stage and they have already capitalised amounts and no future benefits will be received they are doing the right thing by cleaning up the values. Linked to this and would be interesting to know is, who picked this issue up - internal or external stakeholders?

It will be interesting to see what happens next with this. Have seen many projects where people try to capitalise all sorts of things they shouldn't (like training, inefficiencies, preliminary project costs such as those in assessing which systems to build and selection of vendors etc).

As I mentioned before, regardless of all this, these things tend to be a bit of a distraction from the core business so are never really that helpful...

Opinions are like.... everyone has one. DYOR