The 15 Factors that Will Influence Your Timeline
How long will it take to to comply with the new accounting standards? Estimates vary from 6-12 months to 12-24 months.
The real answer is that you won’t know until you get started and get knee-deep into the analysis. In our experience the project implementation time frame will be influenced by the:
- The current state of your lease accounting
- The complexity of your equipment leasing program
- The availability of key stakeholders to participate in the project.
Below is a list of 15 specific factors that will influence how long it will take you to comply with the new lease accounting standards.
Complexity of Your Equipment Leasing Program
To assess the complexity of your equipment leasing program consider:
- How many leases do you have? More than 1,000?
- How big is your lease portfolio? More than $100M?
- How long have you been leasing? More than 3 years?
- How many pieces of equipment are you leasing? More than 10,000?
- How many categories of equipment do you lease?* More than 5?
- How many lessors do you work with? More than 20?
- How may Master Lease Agreements do you have? More than 20?
- How many countries do you lease in? More than 10?
- How many people touch leased equipment (or data about it)? More than 1000?
- How many partial returns/buyouts/renewals do you have each year? More than 100?
*Categories might include material handling equipment, IT equipment, manufacturing equipment, office equipment, corporate aircraft, etc.
If you answered “More than” to several of the questions above, then you have a fairly complex leasing program. However, that does not necessarily mean that it will take you 24 months to comply. If you have your “house in order” then it may be a relatively straightforward process. How strong is your current lease accounting program?
Quality of Your Current Lease Accounting
- How long does it take you to collect operating lease data for the current FASB and IAS accounting standards? Hours? Days? Weeks?
- Where is your equipment leasing data stored today? In electronic format or paper? Are the contracts stored in file cabinets? Various different enterprise applications?
- How accurate and up-to-date is your leasing data? Do you have a process to track returns, renewals, buyouts at the end of term or middle of term?
As with any project, the schedule will be heavily influenced by how busy the key stakeholders are. The same challenges exist for FASB’s new lease accounting rules.
Availability of Your Project Resources
- What is the availability of leasing experts at your organization to participate in the project? Do these experts have the bandwidth to participate in the project in addition to fulfilling their day-to-day responsibilities?
- What other accounting projects will be competing for attention over the coming years? Do you have a large Revenue Recognition underway? Are you expecting mergers, acquisitions or divestitures? Are you planning major ERP upgrades or installations?
More Resources – New Lease Accounting Standards
White Papers, eBooks and Webinars
With the deadlines for the new lease accounting standards approaching quickly, many companies are asking how software can help automate the tasks required for the transition period. US GAAP filers adopting ASC 842 will be required to provide three years of comparative reporting.
Learn the differences between contract-level and asset-level lease accounting in this technical white paper. Review examples of the impact of asset-level decisions, judgments and events for material handling, data center and IT equipment.
Considering Lease Accounting Software to comply with the new FASB or IFRS standards? Download this eBook to understand the potential time and cost savings opportunities resulting from automation of lease classification and financial reporting.