Preparing to Implement ASC 842 - The New Lease Accounting Standards
- By Liz Briggson
- May 15th, 2018
No doubt the new lease accounting standards (ASC 842) have been an on-going topic of consideration. With compliance being required by January 1, 2019 for publicly traded companies, now is a critical time to evaluate and prepare for implementation.
The Encoursa team is enthusiastic to introduce George Azih as our newest presenter. Five years ago, fellow CPA George Azih recognized the massive changes to lease accounting and founded LeaseQuery to create a software solution and implementation process to address the needs of the accounting profession.
We wanted to share four categories to consider when evaluating lease accounting solutions.
In our profession, it not possible to overestimate the importance of data integrity. Just like your general ledger, key controls to preserve data integrity include data entry validation, change history to provide an audit trail, role-based access, prevention of duplicate entries, and the ability to lock entries. These controls are essential components for accurate lease accounting.
The new lease accounting standards add a layer of complexity to compliance. You can seek out certain system features to simplify the process, such as performing Right-of-use calculations, calculating contingent rent, identifying lease and non-lease components, and handling the election of practical expedients. On the reporting side, system intelligence might look like the ability to prepare your annual lease disclosures.
If you manage lease accounting across the globe, this is an area worthy of specific focus. Most importantly, look for a platform with multi-currency functionality: Transactional Currency, Functional Currency, and Reporting Currency. Translations and remeasurements are required under ASC 842 and IFRS 16. Additionally, the ability to handle different borrowing rate charts per entity is key.
Accounting and Operational Tools
Moving from need-to-have to nice-to-have, consider how additional system capabilities can provide better information to your organization. Whether accommodating a 13-week retail calendar or having standard useful life charts, to serving as a central lease repository for the entire company, the level of adaptability and accessibility can be a game-changer for adoption. For instance, imagine introducing lease accounting software that can also be utilized by your Operations team to manage lease renewals and terms.
George will be presenting a 6-part webinar series on the new lease accounting standards. Be sure to check out https://encoursa.com/companies/leasequery for George's upcoming events!
For more on what to look for in lease accounting software, visit LeaseQuery's blog on the topic: https://leasequery.com/blog/lease-accounting-software-comparison-what-you-need-to-know/
- ASC 842
- Lease Accounting
- George Azih