Historically, Finance and Accounting teams have not had to recognize every leased asset on their balance sheet, making the relative task of tracking capital leases easy. With the new FASB and IASB reporting standards, all of a company’s leases both capital (now called finance) and operating leases must be recorded on the balance sheet — and that recognition will take place using new calculation methods.
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The Keys to FASB and IASB Compliance for Facilities and Finance
Discover how both Finance and Accounting must work together and bring together all the other areas to ensure compliance with the new accounting standards.
Putting It All in Perspective
It is important to understand the larger impact of this update and that it will have impacts that go beyond the Finance/Accounting teams. For example, the new accounting standards will affect general business processes considerably, including roles and responsibilities in areas like real estate, procurement, and tax to name just a few; additionally, decisioning lease vs. buy (or capital allocation decisions) may need to be re-evaluated.
Real estate has been well-tracked for a long time at companies large and small, but equipment leases are bringing a new challenge to all firms. As an example, a retail store must now consider all its equipment in addition to its real estate and move it onto the balance sheet. Equipment leases can include items such as forklifts, trucks, back-office technology and general office equipment like computers, printers and in-store POS systems. This change can impact leasing in terms of the structure or terms in deals that the procurement department negotiates and how assets are tracked, repaired, and retired by the facilities department. Prior to these accounting changes, there was much less focus on this area.
Succeeding in Compliance
When it comes to FASB and IASB success, both Finance and Accounting must work together and bring together all the other areas to ensure compliance with the new accounting standards. While change can be difficult, Accruent’s solution(s) are dedicated to easing the burden of the new standard. Accruent customers have successfully achieved compliance based on our proven and detailed approach.
1. Migration from legacy systems
Many businesses use legacy lease administration systems and even spreadsheets for their lease administration and accounting tasks around real estate, while most do have any system for equipment leases. The FASB and IASB reporting standards change requires a proactive approach to achieve and subsequently maintain compliance. The new standards also require multiple departments to have visibility into your lease information; hence having a true system enables “one source of the truth.” Migrating your data into Accruent’s Lease Administration and Accounting for Real Estate and Equipment, takes you from the challenge stage to the solution stage and will help you stay organized.
2. Stay organized
Ask any professional, involved with leases, about the amount of paperwork encountered in lease administration and the answer is unanimous: “Endless.” Instead of having documents wind-up misplaced and using several products/vendors to manage leases for real estate and equipment, stay compliant with a single system that keeps all related data/documents in one location helping to maintain efficiency.
3. Maintain efficiency
The solution should be a one-stop shop for both real estate and equipment leases empowering all responsible teams to take control of their reporting and compliance needs easily and quickly without missing information trailing the FASB and IASB mandated processes. FASB and IASB efficiency means managing the most complex real estate and equipment lease scenarios quickly while mitigating risk, without missing a beat.
