The implementation deadline for the new IFRS 16/ASC 842 lease accounting standards is rapidly approaching. The new standards will require organizations to report and disclose all lease obligations for buildings, office space, motor vehicles and other equipment, and reclassify them as assets and liabilities. Does your organization have an implementation plan and adequate system in place that will meet the new requirements?
The new IFRS and FASB guidelines for lease accounting are described under IFRS 16 and U.S. GAAP ASC 842. The big change is that all leases will now be recognized as assets and liabilities, unless the lease term is 12 months or less, or the underlying asset has a low value. For the details on the differences between IFRS 16 and ASC 842, download this PWC Lease Accounting Guide.
Corporate Readiness is Lagging
As was the case with revenue recognition and other accounting changes, readiness for the new lease accounting guidelines is lagging, and many organizations will be scrambling to comply in the second half of 2018. According to a recent Robert Half/Protiviti survey, more than half of companies surveyed (56 percent) have not begun transitioning to the new lease accounting standard. Sixty-nine percent of the largest firms have started the process, compared to 37 percent of the smallest organizations surveyed. The top four challenges firms face in the transition include training staff, diagnosing the needed changes, finding professionals with the requisite expertise and updating their technology.
Read the full version of this article as published by Accounting Today to learn about the different types of lease accounting software that are available and the pros and cons of each approach.
John O’Rourke is Vice President of Product Marketing at OneStream Software. With a background in accounting and finance, John has over 30 years of experience in the software industry, including 20 years of experience in product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in corporate performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon.