We reviewed all of the SEC Comment Letters related to ASC 842 between January and November 2019 to identify the top 15 accounting and disclosure issues being flagged to help issuers take a proactive approach.
Critical Audit Matters
The new leasing standards are expected to be one of the most common Critical Audit Matters. We compiled the 72 judgments that companies must make before and after adoption to help with CAM disclosures.
The First 10-Qs Under ASC 842
A Study of the S&P 500Analyzing March 31, 2019 10-Qs
As of June 2019, almost 400 of the S&P 500 companies had transitioned to the new lease accounting standards. Collectively the group is reporting a total of $503 billion in operating lease liabilities and $69 billion in finance lease liabilities on their balance sheets. Check out this infographic with some interesting facts about the first 395 big companies to file a 10-Q under the new standards.
ASC 842 & IFRS 16 progress reports.
Lease accounting adoption began in 2019. How are companies approaching the transition?
US Progress Report
ASC 842 Adoption | April 2019
For Private Companies – Over 300 accounting and finance leaders from private companies were surveyed on their lease accounting project progress three years after the publication of ASC 842 on topics like data collection, process readiness, and system selection.
APAC Progress Report
IFRS 16 Adoption | January 2020
Implementing the current lease accounting standard, IFRS 16, has been one of the more complex projects that your finance and accounting teams have faced in recent times. In an effort to better understand market adoption and track current progress, we ran a market survey across the APAC region.
ABOUT THE CENTER
One of the biggest challenges with today’s leasing programs is that there is no real model for success.
Finance organizations don’t know the difference between a “good” leasing program and a “great” one because there are no publicly available studies that benchmark performance. Nor are there any generally accepted KPIs or metrics for accounting, operations, and procurement teams to utilize when analyzing the activities of their own organizations.
Most companies have an under-performing lease portfolio, but do not even realize it because 1) they cannot measure their performance and 2) even if they could, there is no benchmark for comparison.
Finance leaders do not know if they are leasing more or less than their peer group because the data has historically been buried in the footnotes of SEC filings.
Treasurers do not know if they are realizing the economic benefits of a lease because they are not able to compare the expected Present Value to the actual Present Value.
Operations teams do not know if their end-of-term return rates for equipment assets are above or below average because there is no benchmark for comparison.
At LeaseAccelerator, we are relentlessly data-driven.
It drives us mad that there aren’t publicly available metrics or benchmarks to compare the performance of leasing portfolios. So we have invested in building the Leasing and OpEx Research Center to help companies track, measure, and compare the performance of their sourcing, management, and accounting activities.
LeaseAccelerator is the pioneer of the Enterprise Lease Accounting Software Market. Our aim with the leaseaccounting.com website and OPEX and Leasing Research Center is to help companies get educated on the technical accounting standards and best practices so that they can successfully transition to ASC 842, IFRS 16, and GASB 87.