You hear horror stories in the lease accounting webinars hosted by big accounting firms. Some early adopter companies, acting as guest speakers, proudly explain why their implementation efforts involved an army of dedicated staff and project leaders, took many months, spent millions on software and consultants, and still came away with multiple compromises that they had to deal with using manual adjustments or materiality thresholds.
There are certainly complexities in lease accounting. Beyond technical accounting and reporting, there are many areas that could be impacted: new process documentation and internal control testing, business impacts, legal, tax, budgeting, treasury, regulatory, internal audit, contract management, IT, forecasting, etc...
Don't panic! Most of these areas are no more than routine changes. The key to all these changes is mastering the technical accounting impact of the new standard. Unless you plan to fork out consulting fees for eternity, you will need a staff or two who understand the new standard, and who are able to make judgement calls on such topics as discount rates, fixed vs variable lease payment, lease term, fair value of the leased assets, timing of lease reassessment, etc. Most companies have such competent staff after some CPE training and self-study.
Another key piece of the puzzle is the actual work after making all those judgment calls. Properly generating amortization tables, collecting monthly changes information from the many amortization tables to make journal entries, summarizing information from amortization tables to arrives at correct and complete reporting data, do all these in a multi-currency environment. These work are complex to do one time, and time-consuming to do monthly. But their nature is repetitive. As long as you have a competent system in place that can handle accounting and reporting correctly, and you input the correct data from the lease agreement, you can avoid the hassle by using a lease accounting system configured to do just that.
Early adopters who acted in 2017 or early 2018 often find themselves stuck with big-ass software with functionalities that they really need. And these software programs often lack technical accounting depth that companies truly need. That's because these software programs are derived from lease asset management software that existed for many years. They don't have the capability to deal with true accounting issues and reporting requirements. What made it worse is that FASB keeps issuing Accounting Standard Updates regarding leases.
UGAAP lease accounting software is a brand new software written and reviewed by Big-4 professionals and corporate accounting executives. It deals with key accounting issues and meets the true needs of companies' accounting departments and financial report departments. It saves labor costs while eliminating errors by directly delivering journal entries and disclosure reports, and at the same time provide audit-ready details. The company does not have legacy staff from lease management era, therefore the software can be offered at much lower costs.
Are you aware that amortization expenses should be translated at the historic rate? Current portionof lease liabilities should consider both accrued interest and interest payment for the next 12 month? What's your plan for interaction between AP department and lease software? Are you ready to calculate weighted average remaining terms and discount rate, reconciliation of maturity schedule, and the tabular disclosure of costs and cash flow information by lease classification? UGAAP lease accounting software presents this information in a silver plate ready to use at a fraction of cost of other lease software. Just input and harvest.
Go to ugaapinc.com and download a free demo of UGAAP software. You don't need to answer any question. Just download and give the software a try.