The new FASB/IASB standards for lease accounting compliance are quickly approaching, and lease accounting teams everywhere are feeling the looming pressure. Those who haven’t already begun the process of ensuring that they are compliant, are already way behind.
Public companies have until January 1, 2019 to ensure that their leases are fully compliant. These changes mean that companies must account for every single lease and record each lease on a balance sheet. For a small business that leases three machines – no problem. For businesses like Fresenius Medical Care that leases over 100,000 different assets across 3,000 separate physical facilities, that’s a different story and harder for a lease accounting team to grasp.
While a little under six months may seem like a frantic, short time period – getting compliant doesn’t have to be so frenzied. There are key practices that can help you overcome lease accounting compliance hurdles – regardless of where you are with your implementation.
- Build a strong team.
Most accounting teams are spearheaded by a senior finance or accounting executive. This person must have the knowledge to understand all the complexities involved with achieving FASB compliance.
- Implement a proper lease abstraction.
After you’ve identified all your leases, you’ll have to manage the various data formats and field names. If you don’t package your data correctly, you’ll be sifting through information, trying to decipher what exactly means what. Incorrect data formatting also makes future lease changes difficult and costly because you’ll be trying to fix something that should’ve been handled during the implementation.
- Partner with a trusted provider.
Everyone loves spreadsheets – we do too. Nevertheless, spreadsheets can’t meet FASB/IASB compliance standards.
Choose a software solution partner that has proven history of successful data migration and implementation. Your solution partner will not only alleviate headaches in the end, but will help ensure that you achieve the compliance outline set forth by FASB. A trusted partner should also ensure that you will continue to meet compliance, and gain transparency into your entire lease portfolio. Two very valuable things that a spreadsheet can’t do on its own.
For those not worried about compliance quickly approaching, recording leased assets on a balance sheet may seem like an innocuous task. However, the new standards isn’t just a fancy way of saying lease inventory. Recording leased assets for FASB/IASB compliance now means understanding technology infrastructure, data normalization, migration, system validation and business process changes – all arduous, time-consuming and sometimes confusing tasks.
By overcoming these lease accounting compliance hurdles, you can get on the road to a smooth compliance process – regardless of where you are with your FASB/IASB implementation.
See how Accruent can help migrate your data into one proven solution without running into any hurdles. Contact us today!