Market Readiness Two Years after the Publication of ASC 842
Two years had passed since the initial publication of the new ASC 842 Leases standard by the Financial Accounting Standards Board (FASB). In an effort to provide a quantitative progress report on the status of compliance efforts, we developed a Lease Accounting Progress Report 2018. Over 300 finance and accounting leaders from both large US-based public and private companies were surveyed.
The Report Includes
- Staffing the Project Team
- Securing Budget Approval
- Obtaining Executive Sponsorship
- Collecting the Data
- Selecting Software Vendors
- Managing the Project
- Avoiding Common Pitfalls
- Engaging Stakeholders
- Planning for Day Two
Two thirds of companies are on schedule or ahead of schedule with their lease accounting project, which is encouraging as the first implementation deadlines are approaching at the end of 2018. Only 6% indicated that they had completed the project. Approximately 60% of companies think that FASB should extend the compliance deadline with the majority seeking only a one-year delay. It seems the desire for additional time is not solely driven by the complexity of the ASC 842 standard, but rather the combined work effort required to comply with both the new leasing and revenue recognition standards in such close proximity.
As compared to the new revenue recognition accounting standards, 75% are finding the new leasing standards to be just as complex or more challenging. The top implementation challenge with leasing projects, cited by 50% of respondents, is finding and collecting the necessary data. Respondents also indicated that modifying business processes, policies, and controls; upgrading software applications; and project managing the overall work effort were also key implementation hurdles. Only 30% cited that the application of the accounting standards was proving to be a significant challenge. However, many suggested simplification or implementation relief for areas such as embedded leases, separating non-lease components, comparative reporting, and financial disclosures.
To learn more about the findings download the full lease accounting progress report 2018.