Ten Steps to Implementing the New Lease Accounting Standards
After you have studied the new standards and assessed the high-level impacts to your business, it is time to start putting together an implementation strategy. You will need an executive sponsor to champion the project with the executive team, audit committee, and other board members. The executive sponsor will also help to secure the budget and resources such as a cross-functional team of stakeholders from Treasury, Procurement, IT, and Real Estate.
Ten Strategies for Accelerating Your Lease Accounting Project
Are you looking for ways to accelerate your lease accounting project? Read our ten strategies for speeding up the implementation cycle and lowering risks. Learn short-cuts you can take throughout the lifecycle of the project whether you are just getting started or have already started shopping for software.
Conducting an Enterprise Wide Lease Census
Since the publication of the new lease accounting rules, one of the most common questions we have gotten from Fortune 500 companies is: How do I find out what we lease? The real estate team knows what buildings we lease, but what about all the other things – photocopiers, office furniture, laptops, servers, forklifts, trucks, cars, or even aircrafts? It might sound surprising that big companies would not know what they are leasing, but it is understandable when you consider that most large organizations have highly decentralized leasing processes.
100 Data Fields to Collect for Your Lease Accounting Project
The new accounting standards, ASC 842 and IFRS 16, require leases to be tracked at the asset level. That means collecting a lot of data fields from different leasing documents that could be scattered in spreadsheets, systems, and file cabinets throughout the organization. If you’re overwhelmed by the amount of data you need to collect, this document is a great place to start. It lists 100 lease accounting data fields that you need to collect from your leases.
Common Mistakes in Collecting Lease Accounting Data
With the deadline for the new lease accounting standards getting closer, more and more companies are beginning the process of collecting data needed for the transition. At first glance, the process to collect lease accounting data seems straightforward. Read each of the lease contracts and extract key terms such as base and variable rent, payment frequency and timing, and end-of-term options. However, before you jump head-first into reading contracts, we would recommend taking a few minutes to understand the common pitfalls and mistakes that other companies have made collecting lease accounting data.
Critical Success Factors for Collecting Lease Accounting Data
For many companies, capturing lease accounting data will be the biggest implementation hurdle on the path to complying with the new FASB and IFRS standards. Few organizations have a centralized repository to track all of the information about their real estate and equipment leases. As a result, companies will need to go through a process to identify which data needs to be collected and where to find it. Once located, the data will need to be abstracted from contracts, validated to ensure its completeness, and reconciled between systems to confirm its accuracy. For each lease, as many as 100 different pieces of data may need to be captured. A recent PWC/CBRE study found that 73% of companies expected collecting data to be “somewhat difficult” or “very difficult.”
Ten Steps to Collect Your Lease Accounting Data
The Industry’s Most Comprehensive Guide to Collecting Data for the New Lease Accounting Standards
Answers to the Toughest Questions
- What data is required for the new standards?
- Where to look for your lease accounting data?
- What methods to use for abstracting lease data from contracts?
- How to clean up data for accounting treatment?