Are You Ready for The New Lease Accounting Standard?
In February 2016, the FASB released its much-anticipated lease standard, ASU No. 2016-02, or ASC 842. Then in June 2017, the GASB released its own lease standard, GASB 87. Regardless of which standards you follow, these lease standards may significantly impact your entity if you have contracts that are leases or contain leases that support your operations.
How We Can Help You
Cherry Bekaert understands the impact of the new lease accounting standards on your entity could be significant. We know this is not a one-time implementation issue; therefore, we have developed the following service offerings to assist with compliance and a long-term business solution.
We can also assist with implementation and IT system changes if necessary through Cherry Bekaert’s IT system partners.
Lease Accounting Service Offerings
- General diagnostic discussion with management
- Access to a cloud-based, third-party software to input lease data
- Consultation and interpretive guidance, including FASB, GASB, and AICPA interpretations
- Checklists and other tools for implementation
- Assistance with tool identification and vendor evaluation
- Assistance to management with identification of unknown or embedded leases
- Assistance in identifying additional disclosures
- Assistance in identifying additional reports and data needed
- Review of your management’s lease policies and practices
- Compare and contrast the ability of your current processes and controls and IT systems to meet the requirements of the new standards
- Analysis of potential impact on debt covenants
- Analysis of potential impact on compensation agreements
- Reviews of public company filings for comparable companies in similar industries
Next Steps
While the lease accounting standards are now not effective until 2022 for all private and governmental entities and 2020 for public not-for-profits, now is a good time to start preparing by:
- Performing an inventory of all leases – Begin gathering all lease-related documents to identify the key assumptions necessary to implement the new standard.
- Evaluating the impact – Recast your historical financial statements using the new lease model so you can consider the impact on compliance with agreements tied to your entity’s financial statements.
- Proactively work with your bank – Talk with your bank to discuss the impact on loan covenants and consider whether new or amendments to existing debt agreements are required.
Feeling Overwhelmed?
Cherry Bekaert’s dedicated team of professionals can help you navigate these changes and assist with your approach to implementing the new standard.
Now is the time to plan and adequately prepare for changes that will impact your business.