On-demand webinar summary
Are you confident that you have the resources you need to prepare your business for ASC 842 adoption? It’s important to anticipate and plan on meeting important milestones throughout your lease accounting project tTo ensure a smooth transition and achieve compliance, it’s important to be aware of the important milestones ahead of you.
In our recent webinar, How to prepare for ASC 842 adoption, lease accounting experts Joe Fitzgerald, SVP of Lease Market Strategy at Visual Lease, and Lisa Kaestle, Director of Accounting Advisory Services at Grant Thornton, shared insights and lessons learned from public companies, along with useful tips and insights private companies can use to successfully adopt ASC 842.
About Visual Lease
Visual Lease makes easy-to-use software to help organizations manage and account for their leases, and stay compliant with US-GAAP, IFRS and GASB lease accounting standards.
About Grant Thornton
With over 400 successful lease adoptions, Grant Thornton has seen it all. Between inefficiencies, errors, and restatement concerns, leasing will be at the center of discussions during your year-end audit. Find out more about our partnership and their self-service kit.
Here are some key takeaways from the webinar:
Lessons learned from public companies
Public companies have been reporting under ASC 842 for three years now. As a result, there have been many lessons learned in both initial adoption and ongoing compliance (typically referred to as Day 2) that private companies can use to their advantage.
Adoption takes longer than expected
Preparing for ASC 842 compliance can certainly be time-consuming, but many companies don’t realize just how long it could take.
In the webinar, Lisa Kaestle described how initial adoption could easily take anywhere from 3-6 months. “It’s a long process and a lot of times, companies really need outside help. They need to make sure they collect all of their lease data – and that they work with the right vendor. There are a lot of obstacles to think about, including how to compile proper documentation for auditors,” said Lisa.
It’s important to get started on your lease accounting project as soon as possible to give your cross-functional teams the time they need to prepare for adoption. It’s never too early to start this process.
Ensure you remain compliant for Day 2
Once you’ve achieved ASC 842 compliance, it’s equally important to remain compliant. As lease terms change over time, it’s critical to have the right processes and procedures in place to ensure your lease data is up-to-date.
The most effective way to do this is by getting all your lease data in one centralized location, so your teams can easily access and update your lease portfolio as needed.
“Day 1 is a major lift for any business, but if you don’t have those processes put in place for Day 2, it’s going to be the same big lift each time you go through an audit to prove your statements are materially correct and accurate,” stated Lisa.
Identify the appropriate software solution
Much of your business’ lease accounting success hinges on what software you choose to implement. It’s important to evaluate different solutions and find which one best fits your business needs.
It’s also important to understand that Excel is rarely the right approach, even for smaller portfolios. Further, Excel is not a strong software choice for Day 2 lease accounting.
At minimum, you’ll want to make sure the software provides:
- Automated calculations and reports backed by a SOC I Type II certification
- Centralized lease data that enables cross-departmental teams to have complete visibility
- Easily accessible, transparent historical data and audit trail functionality
Six steps private companies can take for the adoption process
Visual Lease and Grant Thornton are very experienced in helping clients with ASC 842 adoption. Together, they have assisted roughly 1,500 companies achieve compliance with the new lease accounting standards.
Based on their strong understanding of what it takes to be successful, they shared six steps to achieve lease accounting compliance.
- Learn the standards – and identify milestones up-front how to get started. Also, , identify a project lead and introduce potential cross-departmental stakeholders to ASC 842.
Identify All Leases
- Assess your business’ lease population and define your approach to identifying known (and unknown) leases.
- Import your lease data and utilize configurable software, like Visual Lease, to streamline your work and ensure completeness, consistency and ease of use.
Analyze Lease Data
- Develop an efficient adoption strategy to make practical expedient and policy elections. Use third-party resources, trainings and checklists to ensure you extract lease data correctly.
Design and Document
- Utilize draft memo templates to document your compliance from adoption and going forward, and consider Day 2 plans.
Complete Adoption and Go-Live
- Finalize and test your reporting ahead of your audit, and take advantage of third-party advisors, like Grant Thornton, for disclosure guidance to be confident and prepared for your audit.
To learn more, view our on-demand webinar: How to prepare for ASC 842 adoption.
Visual Lease and Grant Thornton teamed up to provide you with a proven playbook for an easy transition to ASC 842. Learn how Grant Thornton can simplify the transition to the new lease accounting standard, and how Visual Lease software can provide you with confident, ongoing compliance.