On-demand webinar summary
How do you avoid the risks of improper ASC 842 adoption? Inaccurate lease accounting financials can result in a failed audit, additional fees and fines, so you need to ensure you do it right the first time.
To do so, you’ll want to make sure you have a reliable and complete lease portfolio, lease data, system and processes. But this isn’t easy to accomplish, and many companies still struggle with ensuring their lease data is reliable.
In our recent webinar, ASC 842 Adoption: Avoiding the Pitfalls, lease accounting experts from Visual Lease and Grant Thornton shared:
- Answers to common lease accounting FAQs
- How to circumvent common roadblocks during lease accounting adoption
- Ways to avoid putting your business at risk and feel confident in your financial reports
To learn more, read the summary below or view the on-demand webinar.
Answers to Accounting, Operational and Software FAQs
Did you know that today, nearly all private companies (98%) have started the transition to ASC 842, but one-third (33%) are still not fully prepared to transition to the new standard? This points to the massive pressure businesses are under as they attempt to retroactively learn and organize the details of their leases in advance of their initial reporting period under the new lease accounting standard.
In this presentation, Lisa Kaestle of Grant Thornton answered some common FAQs related to the new lease accounting standard, such as:
- Do I really have to gather all lease information, or can I estimate? Is there a materiality threshold?
- What is an embedded lease? How do I know if I have an embedded lease?
- What departments in my company will be affected? Can finance manage this transition alone? Who should be part of the team for this initiative?
How to Mitigate Operational and Accounting Risks
The new lease accounting standards open your business up to a much higher degree of scrutiny. There are major risks, including but not limited to:
Operational Risks
- Staff, workflow and system requirements and expenses
- Lease review, approval and classification across the company
- Database of record, lease administration and accounting
- Lease data/process workflows/calculations/reporting
- Lease data management across the company
- Lease-buy decisions (short-term leases, fixed-versus-variable payments, lease incentives)
Accounting Risks
- Monitoring leasing activities
- Accounting close cycle timeline and processes
- Internal controls (systems, validation, lease portfolio changes, discount rates, lease re-assessment, disclosures)
- Lease accounting calculations
- Qualitative vs quantitative disclosures
- Financial ratios and metrics (creditor and banking decisions)
- Tax-to-book reconciliations
- External and internal audits and reviews