The new FASB/IASB leasing model is expected to have a profound impact on a company’s overall capital structure as well as requiring a fresh approach to lease accounting and lease administration.
At the same time, adding future lease obligations to the balance sheet will have a major impact on leverage and liquidity ratios and could potentially affect your company’s credit rating.
This dramatic shift is likely to result in substantial operational and system changes which will potentially impact on many functional areas within your organization — including corporate real estate, financial reporting, corporate accounting, treasury, financial planning and analysis, and accounting technology.
Major operational considerations will include:
- New technology capabilities to store lease data and perform calculations, including comparative balance sheet calculations during the ‘transition’ period leading up to adoption of the new standard.
- Challenges in data collection and aggregation across multiple locations and technology platforms.
- Enhanced disclosure requirements.
- Financial ratios may change with potential impacts on debt covenants or other guarantees.
- Impact of limited resources and ongoing business needs on the timeline for adoption.
- The need to re-train your lease administration team to give them more sophisticated lease accounting skills.
- The need to transform your accounting system from paper documents to a sustainable and future-proofed technology solution.
All of which means it will be more critical than ever to make sure your finance/accounting and real estate departments work closely together to integrate their data. This will be essential if you are to meet the challenges of the ‘transition’ period and produce the more accurate reporting required by FASB/IASB in future.
Dedicated to helping you meet the new US GAAP and IFRS Lease Accounting Standards, the Trimble Manhattan team has been thoughtful and deliberate in its development of the new Manhattan FASB/IASB functionality.
To learn more, please visit 'Are you on the road to FASB/IASB compliance?'