Companies Facing Technology Challenges When Implementing New Accounting Standards
Financial statement preparers are shocked to learn how difficult it is to implement new Financial Accounting Standards Board (“FASB”) guidance. According to discussions among Financial Accounting Standards Advisory Council (“FASAC”) members during a March meeting, the software systems updates needed to implement major accounting standards deter companies’ ability to comply with the new guidance before the effective dates. Some FASAC members contributed the inability for companies to meet compliance because vendors either being unprepared or unable to update their systems.
Technology plays an essential role when companies implement new accounting standards. For instance, Cigna’s Mary Hoeltzel suggested that financial preparers were taken aback when implementing Accounting Standards Update No. 2016-02, Leases, due a shortage in available software. She advised preparers and standard-setters to consider how future accounting guidance is implemented in terms of whether it creates an information technology issue. Hoeltzel said this approach allows preparers to appropriately implement the lease accounting standard.
The discussions also mentioned how long it takes to install the proper technology solution and it could require co-development with accounting firms. Rudolf Bless acknowledged how technology is a dependency that requires partnering with a firm to develop the product. Bless’ company, Bank of America, collaborated with a Big Four firm to implement the lease standard.
Cherry Bekaert is aware of the significant impact of the new lease standard. Our professionals can assist your company with the implementation process, review your management’s ASC 842 GAAP policies and practices, and provide other service offerings. Learn more about our services at our lease accounting page.