New Lease Standards for Businesses
A recent survey found that companies are still behind schedule in getting ready for the upcoming lease accounting standard.
Only 43 percent of public companies are in the final stages of their implementation plans for the new standard. For public companies, the new lease standard is effective for fiscal years beginning after December 15, 2018, so for a calendar year company, it would be effective January 1, 2019.
In comparison to public companies, private companies are using the extra year they’re being given by the Financial Accounting Standards Board to implement the new lease standard. However, a recent survey found that 44 percent of private companies are still in the early stages of their implementation plans.
Most accountants are saying the most challenging aspect of adopting the new standard is understanding the new standard rather than budgetary or staffing issues, which speaks to the complexity of the new standard. While the current standards differentiate between operating and capital leases using well known parameters, the pending standard introduces several new concepts.
In response to the complexity of the new standard, many companies are utilizing lease accounting software. Utilizing lease accounting software allows accountants to assess a company’s lease portfolio on the front-end similar to fixed asset management and could be essential in assuring a timely, effective, and efficient transition.
If you have any questions about the new lease standard and how it may affect your business, please give us a call at (217) 351-2000.