The Financial Accounting Standards Board or FASB recently decided to delay the effective date of accounting standards such as ASC 842. This gives private companies an additional one year to draw up strategies to comply with new standards and prepare to disclose leases on the balance sheet. Experts further believe that private entities, nonprofits, and small companies will have the option to defer until 2022.
Given that the private companies have extra time in their hands, how can you make the most out of it? Here are five ways companies can leverage this additional time and successfully implement ASC 842 lease standards.
Businesses are facing challenges in easing different processes involved and managing the whole lease standard implementation effort. Additional time should be used to make necessary changes and improvements in accounting, documentation, and operational processes.
You can take the initiative to collaborate with business partners and associates, understand your software requirements and constitute your team. Moreover, it is a good opportunity to transition from manual processes to automated processes using lease management software solutions.
Remember, deadline extension does not means cancellation. If you have a business with large lease portfolios, start as early as possible. It allows you to follow a systematic approach to use the available resources and make implementation easy and hassle-free. Various businesses that have started to prepare for compliance have realized that workload is too much. Experts believe that even with additional time, implementing ASC 842 standards would be a tedious task.
Collecting a vast amount of lease data is more complex, time-consuming, and resource-intensive than anticipated. Therefore, using a lease accounting software solution will be helpful as a repository for lease data and simplifying compliance reporting as well.
Private companies should leverage this time to learn from other companies. Real-world experience of those who implemented the new standards will be beneficial. The understanding of qualitative and quantitative disclosures will benefit your organization. Some of the issues include lease population accuracy, tracking changes in lease portfolio, activities related to equipment assets, and other events throughout a leasing life cycle. Therefore, this learning will provide you better cost-saving options.
Long-term lease accounting and management solution is the need of the hour. The private companies must discover ways to integrate lease accounting procedures with technology and perform continuous analysis of the portfolio. It will involve regular training, quality control, process refinements, and developing a whole team of experts focused on implementing new standards.
Once the road map for ASC compliance is laid down, frequent lease accounting calculations will be easy. With lease accounting software, journal entry and income statement reports can be produced without hassles. Moreover, finding and sharing lease data across the globe is also possible.
The extra time allows private companies to identify errors and failures in complying with ASC 842 standards. Those managing leases can improve operational efficiency as well. Also, you can avoid errors, mitigate such risks and be more accurate with reporting. In this way, the implementation can be done in a smooth manner.
Private companies should use Corom Lease Management Software that provides valuable features that eases lease accounting and management issues like compliance, reporting, tracking, and much more. For more details, visit www.yardicorom.com.