The Top 5 Lease Accounting Research Studies
Assessing Market Readiness
Since the publication of the new lease accounting standards in early 2016, there have been a number of excellent recent studies conducted by Big Four firms such as KPMG, real estate brokers such as CBRE, and industry associations such as FERF. These research studies attempt to quantify the composition of corporate leasing portfolios as well as the challenges associated with implementing the standards, answering questions such as:
- How many leases does your company have? What percentage are international versus domestic? What is the mix of real estate, IT, fleet, and other types of equipment leases?
- What do CFOs expect the biggest impacts to be? Are they most concerned about changes to the balance sheet, financial ratios, or public disclosures?
- What is the state of readiness of accounting organizations to support the new standards? And what is the current state of their systems, processes, and controls for leasing?
- What are the biggest obstacles to be overcome during the implementation process? Collecting leasing data? Applying the accounting rules? Deploying new systems, policies, and controls?
- How long will the transition to the new standards take? What will it cost?
1) Paving a Path to Success: Preparing for New Lease Accounting Standards
A research study issued by Financial Executives Research Foundation (FERF), the independent, non-profit research affiliate of Financial Executives International (FEI), in collaboration with EY. The study examines companies’ readiness for the new standards, including top challenges expected, estimated project costs, and software purchasing plans. (No registration is required).
Download the Research Study from the EY website. (Opens PDF)
2) The Great Accounting Challenge
Conducted by KPMG, this research study analyzes the operational and financial challenges companies are encountering with the new revenue recognition and leasing standards. The study assesses companies’ progress towards and challenges with implementing the new leasing standards. It also explores the impacts on tax reporting and debt financing strategies.
3) Lease Accounting Survey 2016
A joint survey between CBRE and PwC that studied how the corporate real estate market is responding to the new lease accounting standards. Provides insights on how attitudes towards lease versus buy, contract structure, and pricing may change as a result of the new standards. Provides insights into implementation approaches and software solutions. (No registration required).
Download the Research Study from the PWC website. (Opens PDF)
4) Lease Accounting Survey – Preparing for Implementation
Conducted before the actual release of the FASB and IFRS standards, this Deloitte research study is still one of the best surveys published. The study quantifies financial executives’ concerns about the impacts to balance sheets, income statements, financial ratios, and public disclosures. It compares implementation challenges from project management and systems strategies to tax consideration and technical accounting. Perhaps the best part of the study is the illustrative implementation roadmap – a GANTT chart with activities and timelines. (No registration required).
Download the Deloitte research study. (Opens PDF)
5) Equipment Leasing – Market Readiness Survey
One year after the initial publication of the new ASC 842 leases standard by the Financial Accounting Standards Board (FASB), we conducted a survey of over 250 accounting and finance leaders to determine how much progress has been made towards implementing the new standards. The survey questions assessed the progression of activities in areas such as project leadership, resource staffing, budget allocation, data collection, and systems strategy.