LeaseAccelerator announced the results of its second annual Readiness Survey which gauges the readiness of large companies to support the new lease accounting standards. The LeaseAccelerator Readiness Survey involved over 300 respondents in the accounting and finance functions at large public and private US-based corporations.

The new Financial Accounting Standards Board (FASB) lease accounting standards, published on February 25th 2016, change the way public companies will report leases in their quarterly and annual financial statements. Many real estate and equipment leases, previously only disclosed in the footnotes of investor filings, will now be capitalized on corporate balance sheets. The International Accounting Standard Board (IASB) estimates that over $2.2 Trillion of assets and liabilities will transfer onto corporate balance sheets in the coming years.

“With revenue recognition projects winding down companies are now turning their full attention to the lease accounting standards,” said Michael Keeler, CEO of LeaseAccelerator. “And project teams are discovering that it is not the accounting that presents the greatest challenge with compliance, but rather issues such as business process transformation and data collection that organizations are struggling with the most.”

Key findings of the 2018 LeaseAccelerator Readiness Survey include:

• Higher Than Anticipated Complexity - Almost 75% of companies are finding the lease accounting project to be more complex than originally anticipated. Collecting data, modifying business processes and project managing the global effort are the top three challenges.
• As Challenging or More than Rev Rec - As compared to the new revenue recognition accounting standards, 75% are finding the new leasing standards to be just as complex or more challenging. Most companies have groups outside of accounting playing a strategic role such as real estate and IT.
• Embedded Leases Hardest - More than half of companies have taken an inventory of their enterprise-wide lease portfolio. The most challenging leases to analyze are those embedded in service contracts and outsourcing agreements.
• New Lease Accounting Software Preferred - More than one third of companies have now selected a software vendor to support the new lease accounting standards. New, best-of-breed lease accounting applications are being more widely considered than ERP or real estate systems.

You can download and read the full report here.