Welcome to the Online Lease Accounting Guide

Everything You Need to Know to Implement ASC 842 and IFRS 16.

What are the New Lease Accounting Standards?

The FASB, which governs the standards for US GAAP, and the IASB, which governs the IFRS, have introduced new lease accounting standards which will require operating leases to be reported on-balance sheet instead of in footnotes. Moving operating leases on-balance sheet will result in material impacts for many companies. Large companies with significant operating lease obligations will have a massive challenge ahead of them as they learn the new standards, collect all of their operating lease data, and implement new lease accounting software.

In this online guide, we will help you understand everything you need to know to implement the new ASC 842 and IFRS 16 standards at your organization.  The best practices shared have been collected from the LeaseAccelerator team who has worked with hundreds of companies over the past 24 months on ASC 842 and IFRS 16 implementation projects.

Some are calling the new FASB and IFRS standards the biggest accounting change ever. Trillions of dollars of real estate and equipment leases will move onto the balance sheet, impacting everything from financial metrics and debt covenants to purchasing strategies and executive compensation. Few companies are prepared for these new standards, which start to take effect in 2019.
As with any major project, one of the most important success factors will be assembling the right team of experts to lead the initiative. You will need representation from headquarters functions such as Procurement and Treasury, asset owners such as IT and Real Estate, and occasional participation from Tax and Legal. You will need a strong executive sponsor to champion the project with the board and leadership team as well as a rock star project manager to keep everyone on budget and schedule.
Securing the necessary budget and setting expectations about timeframes will be two critical factors in the success of your lease accounting project. The good news is that lease accounting is one compliance program with potential for ROI. Most companies have neglected the systems, processes, and controls related to equipment and real estate leases, creating lots of potential upside to be gained from re-engineering efforts.
Implementing the new standards will take most large companies between 6 and 18 months. The biggest implementation hurdle to overcome will be collecting the necessary data about all your leases to perform the accounting. Few companies have an inventory of all the assets they lease, and even fewer have all the leasing documentation stored in a centralized repository.
Most companies will purchase a specialized lease accounting software package to comply with the new standards. With a dedicated subledger, these applications track all the financials related to your leases, then generate debits and credits needed to produce your financial disclosures. Critical to the effectiveness of any lease accounting application is a strong lease administration system to track new leases, changes to existing leases, and end-of-term decisions about expiring leases.
Many companies are investing heavily to achieve compliance by the effective date (day one). However, another set of challenges are awaiting lease accounting teams on day two and beyond. To maintain compliance with ASC 842 and IFRS 16 lease accounting teams will need to implement strategies to track changes to the lease portfolio and to keep data synchronized across systems. They will also need to demonstrate effective policies and controls to satisfy external auditors.

Looking for more Technical Accounting Details?

Visit our LeaseAccounting.com site for all the technical details on ASC 842 and IFRS 16.

More Information about the New Lease Accounting Standards

Read what the Standards Boards and Big Four Have Published on Lease Accounting

FASB’s Lease Accounting Page

All the documentation released in the public domain for ASU 2016-02 published in February 2016.

Visit FASB website.

IFRS Lease Accounting Page

The page includes all the historical documents for the IFRS 16 standard published in January 2016.

Visit IFRS website.

PWC Lease Accounting Page

Links to technical accounting briefs, discussion documents, webinars, and podcasts from PWC experts.

Visit PWC website.

EY Lease Accounting Page

Includes “Technical Line” documents, webinars, and an analysis of impacts by vertical industries.

Visit EY website.

Deloitte Lease Accounting Page

Includes a timeline of effective dates, list of expected impacts, illustrative accounting examples, and links to recent news.

Visit Deloitte website.

KPMG’s Lease Accounting Page

Links to newsletters, webinars, and discussion documents, such as first impressions, defining issues, and accounting updates.

Visit KPMG website.

AICPA’s Lease Accounting Page

Includes a practice aid, an implementation plan, an accounting brief, and webinars, as well as links to relevant articles.

Visit AICPA website.

RSM’s Lease Accounting Resource Center

Includes an overview of the new standards, white papers, and advice for implementing the standards.

Visit the RSM website.

Subscribe to Our Lease Accounting Newsletter

You’ll get tips on the new lease accounting standards, lease administration and best practices on data collection, budget planning, project strategies and more.