Given the requirements of ASC 842, companies are learning the task in front of them is much larger than planned and using a spreadsheet will not help them manage the thousands of fields and hundreds of calculations that must be entered. It’s imperative to use a preconfigured lease accounting application.
RSM has helped companies like yours find the most efficient set of technology tools to improve accuracy and reduce compliance risk. We’ve created The 3 Paths to ASC 842 Compliance, a comprehensive roadmap to help you find and select a lease management software system for your organization based on the number of leases within your portfolio, overall materiality of your leases, your existing accounting expertise and knowledge of lease accounting, capacity of internal resources and your existing environment for technology.
There are three levels of implementation—which path is right for you?
Basic Implementation
Utilize a preconfigured lease accounting application, database and reporting.
Pros
- Speed to compliance
- Leverage proven standard configurations and processes
- Cost of implementing technology to be compliant
- Choose when to optimize your configuration and processes
Cons
- Potentially additional staff required
- Using predefined structure and reporting
How to select: Interview prospective partners, understand services for training, testing, and optimization, review template database and evaluate sample deliverables.
If you have a small lease portfolio, RSM Lease Accounting powered by LeaseQuery is a cloud-based solution that provides the functionality you need to help meet the requirements of the ASC 842 and IFRS 16 lease standard. This solution offers robust lease accounting functionality and provides journal entries and financial disclosures required for ASC 842 and IFRS 16.
Full Implementation
Select and implement a technology that is configured specifically for your organization and develop internal capabilities for ongoing lease accounting and lease management.
Pros
- Designed system to all of your required processes starting day one
- Optimized at go-live
- Enhanced ability for management of lease portfolio and economics
Cons
- Potentially additional staff required
- Additional software to maintain within organization
- Manage updates and system changes
How to select: Interview prospective partners, review implementation methodology and evaluate sample deliverables. Also, consider post-implementation managed services or support services to ease the burden of ongoing lease accounting changes and updates.
Lease Accounting Services
Rather than implementing in-house, leverage RSM for providing a proven technology platform, accounting experience and support for ongoing lease accounting compliance and reporting.
Pros
- Speed to compliance
- Stay current on changes without heavy internal lifting
- Compliance without purchasing or subscribing to additional software
- Additional accounting staff will not be required
- Focus on core accounting
Cons
- May not accommodate customized requirements to the extent of a full software implementation
- Standard practice accounting elections may result in larger balance sheet impact
- Lack of your control over software configuration
