4. Change management is key for becoming compliant in the most efficient manner.  Leadership, consistent process and standards, strong communication, training, education and the right tools can significantly reduce the cost and time for the entire compliance program.

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Change Management = the controlled identification and implementation of required changes to ensure successful transitions.

Change management techniques should be used when implementing change and the following situations exist: introducing new processes and procedures, distributed organization structure, many different business units/entities with autonomous authority, management responsibilities are spread throughout multiple organization groups (for example: real estate, procurement, finance and accounting, Information technology, fleet management). Change management is a term typically used for implementing new, major applications like ERPs, CRMs, etc because of the significant cross-functional integration impact.

FASB lease requirements, ‘just an accounting change’, right? Wrong! The reality is these changes are suddenly impacting many currently disconnected aspects of your company, including job roles, software systems and operational processes. The companies that take this on as a change management effort, identifying and planning along the way, are the companies that have the most successful transitions. Bringing in third parties or consultants experienced in the process and change management can greatly reduce the resource strain of any change.

Change management techniques are not one time in nature rather, they are used throughout a complex program/project and serve as the ‘glue’ that keeps all efforts heading in the right direction.

Read more about other time savings ideas on our Lease Accounting site or give us a call at 913.752.9400.

5. Make Practical Expedient decisions early in the process – to maximize the data collection efforts and minimize rework.

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Practical expedient decisions can affect the data capture part of the lease inventory process. Be sure to make these decisions early in the planning of the data collection efforts.

FASB added the choice for companies to use the practical expedients in order to simplify the collection and reporting process.  We have found that leading practices point toward making this decision early in the lease collection and consolidation process in order to minimize rework.

The practical expedient option is intended to provide lessors with a way to not separate non-lease components from the associated lease components when certain criteria are met; requiring accounting for the combined component in accordance with the new revenue standards.

While this option may seem like a small time savings, when chosen early in the process it can greatly expedite the data capture process. An example of this would be in Real Estate leases.

In this example, assume each lease requires two hours to review and extract the correct information. Then this time would equal 2,000 manhours per 1,000 leases

when done on the front end of the lease collection process.  If the practical expedient option is chosen during the inventory process, savings would be applied, but additional rework to revisit each lease would also be incurred (say 500 man-hours per 1,000 leases based on our experiences).

Read more about other time savings ideas on our Lease Accounting site or give us a call at 913.752.9400.

6. Payment calculations can be complex and difficultset your standards early and communicate often to the team that is making these calculations.

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The new FASB standard can make the actual calculations of payments a complicated process and subject to various interpretations. Any inconsistencies in standards cause frustration, additional rework time in the data collection process, and affect future audits from your friendly external auditors.

Spending more time on the front end with defining the standards and approaches for the calculations will pay future dividends. This coupled with frequent communications and training to those involved with lease management should reduce the risk.

Read more about other time savings ideas on our Lease Accounting site or give us a call at 913.752.9400.