The Role of the Lease Accounting Project Manager
As you embark on your lease accounting project, one of the first things you will need to do is assemble a team. While stakeholders from Treasury and Tax to Finance and Fleet will participate in this massive initiative, there is one key individual that everyone will be depending upon to make sure it all gets done – the lease accounting project manager.
At the end of the day, this is the individual that everyone will be relying up to pull off what some are calling the biggest accounting change in history. When the dust settles and the implementation is complete, you will have transitioned hundreds of millions (if not billions) of dollars of operating leases onto your balance sheet.
Like most major enterprise-wide projects, the lease accounting transition will not be easy. At most companies, oversight of the enterprise leasing program has not been a priority. Lease administration teams have been over-burdened and under-staffed. Data about leases is scattered across the enterprise. Although policies and controls may be well documented, they are not usually adhered to, especially in far-flung offices and emerging markets.
Do You Need a Project Manager or a Super Hero?
As a result, the lease accounting project manager may find that s/he is doing things never been done before like:
- Conducting an enterprise-wide census of your leases and assembling the master list into a single database
- Assigning ownership and accountability for equipment leases to specific individuals
- Aligning seemingly unrelated functions, such as corporate real estate and fleet management, towards a common set of systems and processes.
Make no mistake – this is a big job. You will need someone who is able to:
- Abstract data faster than a speeding bullet!
- Write status updates more powerful than a locomotive!
- Lease tall buildings in a single bound!
Hiring a Lease Accounting Project Manager – Four Keys to Success
The individual charged with leading the lease accounting initiative can’t only have a mastery for the traditional project management skills. In our experience, finance and accounting expertise is slightly more important. Ideally, you are looking for someone who is 60% XLS and 40% MPP. Four key skills we recommend prioritizing are:
Finance and Accounting Expertise
The ideal project manager needs to have a finance and accounting background. S/he needs to not be easily scared off when people start talking about depreciation and amortization, guaranteed residuals, and floating rates. In our experience project managers that lack the finance and accounting background will struggle when the conversation turns to IBRs and WACCs, NOLs and AMTs.
Lease accounting is a complex topic to explain and communicate. And unlike many other FASB changes your organization may have undertaken, the scope of this project cannot be contained to the four walls of the accounting organization. You will need to be able to communicate with a broad range of cross-functional teams – many of whom are not experts in leasing or accounting. As with many enterprise-wide projects, the most challenging communication will be with international teams in remote time zones for which email may be the only practical way to communicate.
Success with the lease accounting transition will require that the project manager solicit the participation from some of the busiest people in the company. These are the individuals who are already overworked and understaffed trying to support your ERP upgrade, your recent acquisition, and the upcoming new product launch. So the project manager will need to be able to effectively command the attention of these individuals without having any direct authority of their day-to-day priorities.
Project Management Skills
Last, but not least, s/he will have strong project management skills. For most companies, the project will be behind before it is even started. Comparative reporting period timeframes begin as early as January 2017, which means you needed to start collecting the necessary data months ago. As a result, the project manager will need to be able to quickly jumpstart the project by identifying key milestones, recruiting team members, and submitting a budget proposal. S/he will need to understand the key project risks and escalate issues that impact the implementation timeframe or planned budget.
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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.