LeaseAccelerator has published a 90-Day Countdown Checklist for project teams in the final stages of preparing for the new lease accounting standards. One of the biggest accounting changes ever, the new ASC 842 and IFRS 16 standards will see almost $3 trillion of operating leases transfer onto corporate balance sheets over the coming years. The initial deadlines, which apply to 70 percent or more of publicly traded companies, are approaching in less than 90 days on Jan. 1, 2019.
In the next few months companies adopting at the start of 2019 will have to finalize accounting policies, practical expedient elections and transition approaches. Project teams will need to finish activities such as:
- Validation, cleansing and enrichment of leasing data;
- Testing, migration and deployment of lease accounting systems;
- Staffing, training and enablement of leasing centers of excellence; and
- Reviews, updates and approvals of financial controls.
Most importantly, these organizations will have to operationalize their record-to-report processes for lease accounting to ensure that they can satisfy the new presentation and disclosure requirements that apply to interim statements issued for the first quarter of 2019.
Recent studies from the top auditing firms suggest the majority of companies are behind schedule on implementing ASC 842 and IFRS 16. Many are still implementing new systems, updating business processes and hiring additional staff. It is likely that organizations will have to use manual workarounds, spreadsheet tracking and external consultants to fill the gaps until the appropriate people, processes and systems are put in place.
“Given the complexity of the new lease accounting standards, it is not surprising that many companies feel they are behind. The biggest issue that we are hearing from our global customer base is the challenge of managing a dynamic lease portfolio across its lifecycle to ensure sustained compliance. This capability is at the core LeaseAccelerator’s solution and is the biggest reason why so many companies are choosing us,” said Michael Keeler, CEO of LeaseAccelerator.
The 90-Day Countdown Checklist for ASC 842 and IFRS 16 can be downloaded here.