FASB / IASB Lease Compliance
What is Changing?
The new FASB/IASB lease accounting standards go into effect at the end of 2018 for public companies and in 2021 for both private companies and not-for-profit organizations. These changes will affect how leased assets are reported in a company’s financial statements. Under the new rules, all leased assets, from office space to copiers, must be accounted for at an asset-level basis (except in very limited circumstances).
How Does This Affect You?
Under the new standards, obligations for leases will now appear on the balance sheet as both assets and liabilities. While this is a financial reporting issue, compliance with the new standard requires obtaining information from multiple functions within an organization. In many cases, abstracting data from leases is needed to be able to prepare the requisite accounting calculations.
Not All Portfolios are Alike
Consider the makeup of your leased assets. Some portfolios are made up of primarily real estate assets, while others may be heavy into fleet, railcar, technology or other equipment. Addressing each asset type under the new accounting rules will highlight unique challenges that require unique solutions. The ongoing lease administration of these portfolios is critical to generate future quarterly and annual accounting calculations. There are benefits, to addressing this early, however. Our clients are seeing efficiencies and cost savings from having better lease information, allowing for better decisions.
You Need Knowledge and Expertise
If you haven’t already started, now is the time. You need a skilled partner to navigate these complex accounting changes in a manner that works best for you. Whether you need assistance evaluating potential software solutions, gathering and entering data or abstracting leases, Scribcor is the ideal project partner to support and bolster your team.