On-demand webinar summary
According to a recent VLDI survey, 35% of private companies were less than halfway through or had not yet started the process of gathering information needed to adopt ASC 842. This puts businesses in danger of misreporting lease financials, which exposes them to serious consequences, such as increased audit fees.
In our recent webinar, How to Avoid Lease Accounting Compliance Risks, Rosemary Courtney, Manager of Technical Accounting at Visual Lease, and Bill Harter, Principal Solution Advisor at Visual Lease, discussed common challenges and risks associated with lease accounting compliance. They also provided tips to ensure you are set up for a successful audit post-adoption.
As a result, you should have a better understanding of the risks of inaccurate lease financials and how to avoid these mistakes. Let’s take a closer look.
Lack of processes
The new lease accounting standards require cross-functional collaboration in order to stay on top of any updates made to leases. Without clear responsibilities and defined processes, some critical lease updates may slip through the cracks – and put you at risk of inaccurate lease information. That’s why it’s important to develop defined, reliable processes that involve the right personnel while clearly identifying internal controls.
Manual accounting calculations
Manual accounting calculations are not only time-consuming given the complexity of ASC 842, but they are also prone to human error. Automated technology significantly reduces both the risk of miscalculation and time spent on reporting.
Lack of dedicated resources
It’s rare for companies to have a dedicated resource for lease accounting. So, how do you ensure you stay compliant amidst employee turnover? Our experts agree that naming a project lead in each functional area that contributes to the lease portfolio is the best approach, such as finance, real estate and legal.
Lack of visibility into maintaining lease information
Leases change all of the time (i.e. extend, terminate) and each change needs to be accounted for on the balance sheet. It can be difficult to ensure your lease data is up to date if your leases are not in an accessible, centralized location.
For more insight into how to prepare for lease accounting success, view our on-demand webinar “How to Avoid Lease Accounting Compliance Risks”.
Visual Lease is the #1 lease optimization software provider. We help organizations become compliant with FASB, IFRS and GASB lease accounting standards, while simultaneously improving the financial, legal and operational performance of their leases. Our easy-to-use SaaS solution has been used by over 1,000 companies with a 99% retention rate.