Earlier this week, I participated on a webinar on the new lease accounting standards. The webinar was given by one of the major accounting firms and was specifically directed at how the new lease standards will impact lessees.
One of the polling questions asked of participants during the course of the webinar was whether, in the course of adopting the new standard, the participants’ organizations intended (a) to upgrade their systems-based solutions; (b) use Excel or (c) whether they had not decided. The responses were as follows: 25% will likely upgrade IT, 25% will likely use Excel and 50% had not decided.
Although hardly a statistically valid survey, the responses lead me to believe that a significant number of lessees have yet to have a complete understanding of the nature of the accounting changes and the additional complexity involved in complying with these changes. Not only will the basic accounting become more complicated, the footnote disclosure required is much more comprehensive resulting in accumulating financial data that had not been required previously.
We at iLeasePro continue to emphasize the need for early analysis and preparation so that organizations do not get surprised late in the process. Make sure that all of your stakeholders within the organization understand how the new standards impact not only lease accounting and lease management but also the business decisions and financial analysis encompassing the lease process. And finally, do not underestimate the benefits that a comprehensive technology solution can provide in meeting all of these challenges.