AITB No. 06 Accounting for AI-Enhanced Cybersecurity Measures
Issue: How should entities account for the costs and potential benefits associated with implementing AI-enhanced cybersecurity measures to protect digital assets and data?
Background: With the increasing threats in the digital landscape, many entities are turning to AI-enhanced cybersecurity solutions. These AI systems can predict, detect, and neutralize threats in real-time, but they come with associated costs.
Guidance:
- Capitalization of Cybersecurity System Costs: Costs related to the development or purchase of long-term AI cybersecurity solutions should be capitalized as an intangible asset.
- Expensing of Regular Updates: Given the dynamic nature of cyber threats, regular updates and patches are crucial. Costs associated with these routine updates should be expensed as incurred.
- Amortization of Capitalized Cybersecurity Costs: The capitalized costs of the AI cybersecurity systems should be amortized over its expected useful life, considering the rapid evolution of cybersecurity technology.
- Recognition of Cost Savings: Cost savings resulting from prevented data breaches, reduced downtime, or improved system efficiency due to the AI-enhanced cybersecurity measures should be recognized in the income statement in the period they are realized.
Examples:
- Company F invests $6M in an AI-driven cybersecurity system with an expected useful life of 5 years. They would capitalize the $6M and amortize it over the 5-year period.
Note: This is a fictional representation and does not represent any real-world standard for AI. The development of such standards would involve extensive consultations with experts, stakeholders, and the public. Fictional representations simplify complex AI concepts, stimulate discussion, envision future scenarios, highlight ethical considerations, encourage creativity, bridge knowledge gaps, and set benchmarks for debate in fields like accounting.