Tech check! New lease accounting standard almost here

FASB’s lease accounting standard (ASC 842) will take effect for periods beginning after Dec. 15, 2021 (calendar year 2022) for private companies.

Which means hopefully by now you’re in full-on preparation mode. But what technology route should you take to get – and keep – your company in compliance?

Take a look at what your peers who’ve gone before you have done to help shape your plan of attack.

Which technology to tackle the new lease accounting standard

A recent survey by LeaseQuery can get you those answers. LeaseQuery asked companies that have already been through the transition what type of solution/technology they’re using for it.

See how what they said compares to your plan to comply with the new lease accounting standard:

• lease accounting software (45%)
• Excel or spreadsheet (38%)
• ERP system (7%), and
• lease management software (5%).

Note: No one outsourced this responsibility.

Obviously, while popular, Excel isn’t the ideal solution. Not only is it manual and prone to errors, but it can add significant time – and thereby expense – to your next audit, as auditors will need to understand how you set spreadsheets up, etc.

If this remains the route you’re going, just be sure to secure all spreadsheets as well as possible: password protect, set up read-only access, etc.

Learn from their challenges too

There are lessons not only in the technology your peers tapped, but the obstacles they faced, as well. And many were slow to start implementing.

Take a look at the five most challenging aspects other companies have encountered while they were in the midst of implementing the changes:

1. Understanding the new standards
2. Lack of time
3. Number of leases to transition
4. Lack of human resources, and
5. Lack of budget and/or tools.