BDO USA, LLP, one of the nation’s leading accounting and consulting organizations, and CoStar Real Estate Manager, a division of CoStar Group, Inc. and a leading lease management software provider, announced a strategic alliance under which BDO and CoStar will team to provide companies with an end-to-end solution to meet the looming deadlines for compliance with new lease accounting standards recently finalized by the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

The new standards require companies to recognize practically all obligations for real estate, equipment and other leased assets on their balance sheets. U.S. Securities and Exchange Commission data indicates that Fortune 500 companies currently have more than $700 billion in off-balance sheet lease obligations that will be affected by the new standards, while the IASB projects new balance sheet additions worldwide may be in excess of $3 trillion.

This significant shift in accounting policy may have far-reaching impacts in many areas such as debt covenants and financial ratios. It will affect businesses in numerous industries, especially those in the consumer products, restaurant, retail, financial services, utilities and oil & gas. By proactively preparing for the new standards, businesses can greatly mitigate financial reporting issues and negative consequences for errors and restatements.

“We are extremely pleased to work with CoStar in helping clients meet the challenge of complying with the new lease accounting rules. Although the standards do not take effect until after December of 2018 for public companies and after December 2019 for private entities, organizations must present prior periods on their financial statements and will need to adjust balance sheets retroactively for a period of two years before the effective date. This is an arduous and time consuming undertaking for businesses already suffering from compliance fatigue,” said Mike Stevenson, National Assurance Partner at BDO USA. “In order to make this transition less burdensome and meet compliance deadlines, companies need to take action now. By working with CoStar’s Lease Manager software and BDO’s technical expertise, companies can greatly accelerate the process of analyzing and classifying leases for the new requirements and bring them into compliance well before the deadline.”

CoStar’s proven Lease Manager software service provides the complete functionality needed to manage and report on real estate, equipment and other leased assets. It is delivered in a software-as-a-service (SaaS) format and offers out-of-the-box functionality that includes balance sheet impact, classification tests, amortization schedules, journal entry processing and GL system integration. To ensure compliance with Sarbanes Oxley’s requirement to demonstrate effective internal controls and procedures for financial reporting, CoStar’s platform completes an SSAE 16 audit annually.

“As a premier national accounting firm serving major multinationals, middle market companies, and emerging businesses, BDO is an ideal partner for our lease accounting solution,” said Andy Thomas, President of the CoStar Real Estate Manager division. “Leading-edge tools are only as good as the people who use them. BDO professionals are trusted advisors to their clients. The experience and insight they bring to the client relationship greatly enhances the impact of our Lease Manager solution.”

For more information on the new lease accounting standards, go to BDO Knows Leases.