Ensuring the Accuracy of Your Lease Accounting Calculations
One of the biggest challenges with ensuring the accuracy of your lease accounting system is the sheer number of potential use cases that need to be tested. If you do the math, you may find there are over 100 billion different lease accounting combinations that need to be tested when you factor in the various contract terms, lifecycle events, and accounting variables that might be encountered.
The Lease Accounting Validator determines which of the 100 billion use case scenarios are applicable to customers’ portfolios, and it then performs a series of automated tests to confirm the accuracy of the results.
There are Over 100 Billion Combinations
Who Will Regression Test Your System Outputs?
Tame the Complexity with Automated Testing
While most organizations do not have to worry about 100 billion test scenarios, the challenge is knowing which scenarios could apply to any given organization. Trying to test even 1 percent of the possible scenarios, limited only to the lease characteristics most common to an organization, could result in over 1 billion different use cases. Such a large volume would require a small army of accountants to perform regression testing, which ideally should be performed each time your lease accounting software vendor changes its code.
If your software provider doesn’t perform the regression testing automatically then your team will be burdened with this complexity.
- Inflation (CPI)
- Financial Index (SOFR, LIBOR)
- Performance (Sales)
- Usage (Mileage, Hours)
Does your lease portfolio have contracts with mixes of:
- Operating expenses (CAMs)
Does your lease portfolio include start or end-of-term fees such as:
- Initial direct costs
- Lease incentives
- Security deposits
- Asset retirement obligations
End of Term Options
Does your lease portfolio include a mix of contracts with different options for:
Does your lease portfolio include different classifications and exemptions:
- Operating leases
- Finance leases
- Short-term lease
- Low-value lease