FASB Wish List In-Depth Part 6

Toward the end of 2020, we published a Lease Accounting Holiday Wish List for organizations that still need to adopt ASC 842, IFRS 16, and GASB 87. This is the sixth in a series of articles to provide detail for each of those wish list items.

6: Willingness to Listen to Experts

The old lease accounting standards had been in place for about 40 years. Only the longest tenured corporate lease accountants had a chance of recalling life before straight-line lease accounting, and the subsequent growth of using leases to finance expansion. The remaining lease accountants may have had to learn to use spreadsheets, but not how to change the fundamental way leases were treated.

The new standards have created several major changes for lease accountants. Although the straight-line expense under new operating leases will resemble straight-line costs under old rules and remain constant through a term, the lease liability will change every day because of the interest component. Balance sheet reporting means more visibility, more attention, and more touches.

The increased visibility and associated compliance effort have the potential to overwhelm corporate accountants. The good news is that all companies are in the same situation, and have created a demand for experts to guide them through the transition. Lean on external auditors and consultants who understand the relationship between accounting decisions, software design and functionality, and ongoing management after adoption.

We at Jackson Cross wish for you great experts to guide you, and we are available to help execute this critical project.