Lease accounting and automation simply go hand-in-hand. In fact, it’s difficult to achieve lease accounting compliance without the help of automation. In this episode of The VLDI Podcast, our host, Joe Fitzgerald, discusses some of the reasons why automation is so crucial in achieving and maintaining lease accounting compliance.
VLDI Podcast Episode 3 Transcript
Hi there, Joe Fitzgerald here, your host of The VLDI Podcast.
For this episode, I will discuss the importance of automation in lease accounting. Let me provide you with a bit of context.
According to a recent Gartner survey, finance professionals anticipate audit fees will increase this year due to the impact of inflation, ongoing COVID-19 effects, as well as acquisition and divestiture activities.
In fact, 62% of the companies polled expected their audit fees to increase. Why the connection to lease accounting?
Finding the right solution to automate your lease accounting process to achieve and sustain compliance with ASC 842, GASB 87 and/or IFRS 16 can ultimately save your company a lot of money in audit fees.
The same Gartner survey found that organizations that automate at least 25% of their internal controls paid on average almost 30% less for their audit fees.
That’s significant! In fact, for some companies, this level of savings clearly outweighs the annual cost of lease accounting software solution subscription(s).
Lease accounting involves complex calculations that, if done manually, are prone to human error. As an expert in the industry, it’s my opinion that using a spreadsheet such as Excel puts you at risk for inaccurate lease accounting.
The reality is – errors come at a significant cost. In fact, just last year, we surveyed senior finance and accounting professionals from private companies and a staggering 99% acknowledged real fears of potentially misreporting company lease information. And here were some of their top concerns:
- 51% noted increased audit fees and fines
- 49% said there’s potential damage to a company’s reputation
- 48% pointed out the risk of legal action
- 44% were concerned about damage to their own professional reputation
To avoid risks, automation is crucial to that success. Trust me, your auditors will thank you for implementing the right technology. And when you do, you can reduce risk, improve operational efficiencies and save money on your audit. That’s a winning combination.
I hope this information serves you well. Hope you tune in for the next episode!