Audit cost capitalization sensitivity
Audit whether permitted software-cost capitalization choices change reported project ROI and priority even though scenario cash NPV, downside, and economic rank are unchanged.
What it's for
Shows leaders when a roadmap winner exists only because software costs were deferred—while keeping the underlying cash economics visible and invariant.
What you give it
Inputs split into evidence read from your connected systems, calibration your team owns, and numerical controls that affect precision but never the result's meaning.
| Field | Type | Role | Required |
|---|---|---|---|
| discount_rate_per_period | number ≥ 0, ≤ 1 | Your calibration | Yes |
| max_detail_rows | integer ≥ 1, ≤ 500 | Numerical control | Optional |
| projects | array of objects (3 fields) ≥ 2 items | Evidence | Yes |
| scenario_probabilities | array of number ≥ 2 items | Evidence | Yes |
| tail_probability | number ≥ 0.001, ≤ 0.5 | Your calibration | Optional |
Each projects
record
| Field | Type | Required |
|---|---|---|
| benefit_cash_flow_scenarios | array of array (≥ 2 items) | Yes |
| cost_items | array of objects (8 fields) (≥ 1 item) | Yes |
| id | string (non-empty) | Yes |
{
"discount_rate_per_period": 0.03,
"projects": [
{
"benefit_cash_flow_scenarios": [
[
50000,
80000,
100000
],
[
35000,
60000,
80000
],
[
20000,
40000,
55000
]
],
"cost_items": [
{
"amortization_periods": 8,
"amount": 150000,
"current_capitalized_fraction": 0.6,
"id": "internal-build",
"incurred_period": 0,
"maximum_capitalized_fraction": 0.85,
"minimum_capitalized_fraction": 0.25,
"placed_in_service_period": 1
}
],
"id": "platform-rebuild"
},
{
"benefit_cash_flow_scenarios": [
[
55000,
45000,
30000
],
[
45000,Truncated for display — the full payload is 75 lines.
What you get back
This is the actual output of running the example above — computed by the same function the platform calls, not an illustration.
{
"assumptions": [
"Benefit paths are incremental operating contribution on one horizon and currency; cash cost occurs at incurred_period regardless of accounting treatment, so pre-tax cash NPV is invariant by construction.",
"Capitalized cost is amortized straight-line from placed-in-service period, expensed cost is recognized when incurred, and permitted capitalization bounds come from accountable accounting policy rather than management preference.",
"Tax timing, covenants, impairment, residual value, capitalization eligibility changes, financing, working capital, and benefits beyond the submitted horizon are excluded unless represented separately.",
"A ranking reversal diagnoses sensitivity of reported accounting priority—not misconduct, economic value creation, or individual performance—and requires finance/controller review before any decision."
],
"configuration": {
"accounting_horizon_periods": 3,
"amortization_method": "straight_line_from_placed_in_service_period",
"discount_rate_per_period": 0.03,
"scenario_count": 3,
"tail_probability": 0.25
},
"decision": "capitalization_policy_can_reverse_project_priority",
"method": "cash_invariant_capitalization_policy_sensitivity_audit_v1",
"project_diagnostics": [
{
"current_capitalized_fraction": 0,
"current_closing_unamortized_book_value": 0,
"current_policy_roi_rank": 2,
"current_rank_differs_from_economic_rank": true,
"current_reported_operating_roi": 0.4821,
"cvar_cash_npv_loss": -3123.7628,
"economic_npv_rank": 1,
"expected_cash_npv": 31295.4803,
"maximum_capitalization_roi_rank": 2,
"minimum_capitalization_roi_rank": 1,
"permitted_reported_operating_roi_range": [
0.4821,
0.4821
],
"probability_positive_cash_npv": 1,
"project_id": "conversion-quick-win",
"reported_roi_range_width": 0
},
{
"current_capitalized_fraction": 0.6,
"current_closing_unamortized_book_value": 67500,
"current_policy_roi_rank": 1,
"current_rank_differs_from_economic_rank": true,
"current_reported_operating_roi": 0.6083,
"cvar_cash_npv_loss": 39322.2735,
"economic_npv_rank": 2,Truncated for display — the full payload is 68 lines.
How it works
Statistical audit & measurement — Check whether a number is fit to decide on: coverage, timing, reconciliation, and the gaps a dashboard hides.
- 1 Freeze incremental benefit cash-flow scenarios, full cash cost at incurred period, placed-in-service timing, useful life, and controller-approved minimum/current/maximum capitalization fractions on one horizon.
- 2 Compute cash NPV identically under every policy, then separately recognize current expense and straight-line amortization under each permitted accounting policy.
- 3 Compare economic-NPV rank with reported-ROI ranks, expose deferred book value and ROI ranges, and escalate a priority reversal for controller review rather than treating accounting optics as value creation.
Before you trust it
Every tool in the catalog ships with the conditions under which its answer is meaningful — and the conditions under which it should abstain instead of guessing.
Assumptions & guardrails
- Metric definitions, weights, aggregate grain, sampling, missingness, dependence, and comparison windows correspond to the management claim being audited.
- Costs and benefits are incremental, share one currency and horizon, capitalization bounds are policy-eligible, useful lives and service dates are supportable, and omitted tax, impairment, covenant, residual-value, and beyond-horizon effects are immaterial.
- Association, instability, or measurement quality is not a causal effect and must not be converted directly into an individual employment decision.
- A reversal shows accounting-policy sensitivity, not manipulation, misconduct, economic merit, or individual performance; cash economics remain the decision anchor unless accountable owners explicitly govern another objective.
Minimum evidence
- projects: at least 2 rows/items
- scenario_probabilities: at least 2 rows/items
- discount_rate_per_period: required and organization-defined
How to validate it
Validate on future periods or held-out aggregate units, compare with a simple baseline, and require stability across plausible metric definitions and decision thresholds.
Calibrating it to your org
Same for everyone
The mathematical kernel, validation rules, method version, and JSON output semantics are organization-independent; no tenant-trained coefficients or company benchmark is embedded in the function.
Specific to you
- aligned project-by-scenario-period incremental benefit cash-flow matrix with one governed horizon and scenario probability vector
- cost and benefit perimeter, currency, cadence, discount rate, scenario vintage and probabilities, capitalization minimum/current/maximum, useful life, service date, tail level, tax/impairment exclusions, and decision materiality
Calibration workflow
- 1 Define the management decision, target outcome, aggregate unit, privacy boundary, cadence, and prediction/intervention horizon for this organization.
- 2 Build a tenant-scoped historical cohort using only information available before each prediction or decision; preserve zero periods, censoring, assignment probabilities, and unresolved outcomes when the method requires them.
- 3 Estimate statistical parameters on training history, but obtain costs, utilities, risk tolerance, practical-effect thresholds, capacity, and policy constraints from accountable decision owners.
- 4 Validate on later time windows or held-out aggregate units at the deployment grain, against a simple baseline and the function-specific validation strategy.
- 5 Deploy only if the returned decision clears evidence, overlap, calibration, robustness, and guardrail checks; warning, unsupported, schema-gap, and fallback decisions are abstentions.
- 6 Monitor realized outcomes, data drift, coverage, and decision regret; recalibrate at a governed cadence or after a detected regime/definition change, never merely because a stakeholder dislikes the result.
Call it from your AI
You don't wire up 388 tools in your MCP client. The GitRevio MCP server exposes 18 tools, three of which let an agent search the catalog, read a tool's schema, and run it — so the assistant finds this one on its own.
gitrevio_capabilities_search
{ "q": "audit whether permitted softwarecost capitalization choices" }
→ finds "audit_cost_capitalization_sensitivity"
gitrevio_capability_describe
{ "capability_id": "audit_cost_capitalization_sensitivity" }
→ returns the input schema and agent guidance shown on this page
gitrevio_capability_run
{ "capability_id": "audit_cost_capitalization_sensitivity", "arguments": { ... } }
→ returns the result shown aboveWorks in Claude Desktop, Claude Code, Cursor, Cline, Continue.dev, Goose and Aider. See the MCP server.
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