While the new FASB and IASB lease standards are not converged, all companies complying with U.S. GAAP or IFRS will require capitalization on the balance sheet of nearly all lease commitments. For investors, this is expected to add prominence and transparency to off-balance sheet real estate and equipment financing arrangements. For preparers, it will add significant cost for implementation activities and new lease accounting systems.considerations
A panel of experts from RGP and LeaseAccelerator draw upon real world implementations of ASC 842 to discuss:
Budgeting and Planning – How to estimate the project timeline and budget for implementation
Leasing Data – How to inventory your leases, abstract the data from leases, and collect additional details from users
Project Team – Who to involve on the core team and how to get participation from lines of business
Testing – How to design test plans, select sample leases, and execute test plans to ensure accounting accuracy
Controls – Which processes, policies, and controls to ensure internal controls over financial reporting
Project Governance – How to approach communications with the CFO, CEO, and audit committee
Insights and Tools
- How many operating leases do you have?
- If you have supply agreements, do they contain embedded leases?
- Is your data consistently gathered and subject to SOX controls?
- Do you have a centralized repository and processes for entering into a lease, accounting for the lease and retaining the documents?
- Is there an opportunity for ROI?
- Would it be beneficial to adopt the Standard and ASC 606 at the same time?
Similar to the new Revenue Recognition Standard, the new Lease Standard will impact functional areas beyond accounting and financial reporting:
- Treasury: Debt covenants
- Sourcing: Lease vs. buy analysis
- Legal: New terms or conditions for leasing arrangements
- Sales & Marketing: Negotiations, close processes
- Real Estate / Fleet / Asset Management: Complex sublease or sale-leaseback transactions
- IT: Modification or selection of systems; data & integrations
- HR: Compensation metrics, organizational design
- Tax: Leases category differences; impacts for deferred taxes, sales and property taxes
Technology will likely play an important role in your company’s lease implementation efforts. Identifying where and how your lease related data is stored is a necessary first step. There are many tools in the market to assist in data abstraction, lease management and accounting. We have experience in helping companies select the most appropriate software for their needs, using an approach which begins with identifying the business requirements based on the company’s specific lease portfolio. We also have experience in implementing these packages and providing a full-service solution for your company.
Through our partnerships, clients gain access to several of the most respected and established providers of leasing software and a talented pool of consultants able to assist with the software implementation. Contact us to schedule a demo.
CoStar is the smart choice for cloud-based software and professional services that provide lease accounting, lease administration, portfolio, project and transaction management solutions. Focused on the compliance with the new lease accounting standards, the Lease Manager software provides the enterprise functionality needed to manage and report on real estate, equipment and other leased assets.
"We are pleased to align our proven lease accounting solutions with RGP. The combination of our Lease Manager product suite and the trusted advisors of RGP offer clients a proven combination for tackling compliance with the new lease accounting standards."
— Andy Thomas, President - CoStar Real Estate Manager
LeaseAccelerator offers the market-leading software-as-a-service (SaaS) for Enterprise Lease Accounting, the simplest, fastest and easiest path to compliance with the new FASB and IFRS standards. Using LeaseAccelerator’s unique Global Lease Accounting Engine, customers can apply the new standards to all types of leases – real estate, equipment, and embedded – at the asset level as specified by FASB and IASB. On average, the firm’s Sourcing and Management applications drive savings of 17 percent with smarter procurement and end-of-term management, enabling compliance plus ROI.