How to make an informed decision on your lease accounting solution
Investing in a dedicated lease accounting solution is the best way to achieve GASB 87 compliance. The lease accounting standard requires operating leases to be recorded on the balance sheet in the form of right of use (ROU) assets with corresponding lease liabilities. Doing this well – and with accuracy – means choosing technology that can automate required reports and calculations, and support ongoing management of your leases.
However, it’s not always clear which solution is best for your organization. While tools like Excel have certainly been useful for accounting purposes in the past, it’s not the ideal choice for something as complex as achieving and maintaining lease accounting compliance.
Just like your leases, lease accounting requirements may change and evolve over time. It’s critical to stay on top of these changes to stay compliant, and with the right lease accounting software, you’ll be able to do so effectively.
In this blog, we will share a summary of the information that can be found within our Buyer’s Guide to Lease Accounting Software for GASB Compliance, so you can feel confident about your selected lease accounting solution.
Who should be involved?
To get (and stay) compliant, it’s important to involve key personnel that represent various functional areas across your business. This often includes departments like accounting, procurement, contracting and more.
Including cross-departmental stakeholders ensures you have visibility into every lease held by your organization, and enables you to easily track any lease changes over time.
In the Buyer’s Guide, we share questions for you to consider when identifying which stakeholders should be involved, such as:
- How does your organization acquire leases?
- How does your accounting team receive notification when other teams add new leases, or make lease changes?
- How does your organization make strategic decisions about renewals and asset use?
Risks that arise without lease accounting software
In a recent VLDI report, a staggering 99% of surveyed senior finance and accounting professionals acknowledged real fears in potentially misreporting their lease information. This points to a critical need for automation, as manual solutions (e.g. Excel) put you at higher risk of error.
Under GASB 87, inaccurate lease accounting financials can result in increased audit fees and fines, damage to your organization’s reputation and potential legal action.
In addition to providing automation, dedicated lease accounting technology should solve your existing (and future) pain points, such as:
- Pain Point
Automated, reliable calculations
Transparency into the math backing the calculations
Comprehensive remeasurement calculations to keep you compliant through Day 2
Third-party auditing to ensure data security and calculation accuracy
Lease accounting need-to-knows
Preparing for lease accounting is time-consuming. It requires a lot of time and effort to identify, gather and organize lease data. In particular, embedded leases (lease components within a contract) are more difficult to locate and often require more time to pinpoint. And, regardless of how many leases you have, gathering leases is a tedious and lengthy process, which is why organizations should get started as early as possible.
Also, remember that lease accounting compliance isn’t a one and done disclosure; it’s ongoing. Therefore, your solution should support ongoing maintenance of your lease portfolio.
Don’t delay – invest in the right solution
Selecting the right lease accounting solution isn’t easy, but it’s critical to ensure you are set up for success with GASB 87.
With our Buyer’s Guide to Lease Accounting Software for GASB Compliance, you will be able to make an informed decision about which lease accounting technology is right for your organization.