New lease accounting standard 'more complex than anticipated'

Two-thirds of U.S. corporations think the new lease accounting standards are more complex than they anticipated, writes Asset Finance International. 

 

A progress study by LeaseAccelerator surveyed the attitudes of 250 accounting and finance professionals at large public and private corporations based in the U.S. towards the new standards, now out exactly one year. Key findings:

 

* Two-thirds of companies are on or ahead of schedule regarding implementation of the new rules. But while 70% have assigned a formal project manager, less than 30% have freed up a budget for implementation. And 25% had not yet started with the implementation.

 

• Nearly two-thirds find the new lease accounting rules more complex than anticipated. Main challenges: modifying business processes, collecting data, and deploying new software.

 

• More than half have a list of required data and an inventory of their lease portfolio. Around a third of have collected 25% or more of their overall lease accounting data. Leases from the IT and fleet categories are proving among the most challenging to analyse.

 

• Around 70% had defined a lease accounting software strategy, but less than a third had issued an RFP, selected a vendor or started loading data.

 

The new lease accounting standards were developed by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). They  change how public companies must report leases in their financial statements. 

 

The implementation deadlines for the new standards start in 2019, but companies will also have to provide three years of comparative income statement, beginning on January 1, 2017 for calendar year end filers.