Accounting Standards Update, Leases (ASC 842)
With the deadline to finalize implementation of the new lease accounting standard approaching for private companies, there are advantages to working with a firm with proven experience assisting companies with conversion to ASC 842. Our team will assist on all aspects of the implementation – from conducting the preliminary impact assessment to analyzing and categorizing existing leases, establishing policies and procedures for ongoing lease activity, addressing technology and infrastructure requirements, and project management. Our detailed plan will focus on potential challenges and risks along the way.
The FASB’s new lease accounting standard (ASU 2016-02 / Topic 842), is bringing most leases onto lessee balance sheets. With the implementation deadline approaching, both lessees and lessors should consider seeking out expert assistance in understanding and executing its implementation efforts:
- Project management
- Technical accounting, including embedded lease assessments, discount rate estimations, accounting policies, etc.
- Data collection
- Processes, procedures and internal controls
- IT system selection
- IT system implementation and interfaces
The level of effort required to implement the new standard depends on the size of an organization’s lease portfolio, the complexity of its business and the relative importance of its leased assets. CohnReznick works to deliver tailored solutions to efficiently address each of our clients’ needs when transitioning to the new standard. Our scalable approach can reduce the time necessary for implementation by, among other things, leveraging artificial intelligence to extract critical data from lease contracts.
For organizations having less significant lease contract portfolios, we will deploy a pre-defined, accounting focused model designed for your near-term reporting needs while also providing the foundation for sustainable lease accounting and reporting in the longer run.