As the deadline for lease accounting standard compliance approaches, private companies should prepare to adopt the required changes.
While early adoption is permitted, all companies must use the new lease accounting standards for annual reporting periods beginning after December 15, 2021.
Now is the time to start planning for successful implementation. Here are a few steps that can help you prepare:
- Examine any components that may be excluded from the standards, such as assets under construction, intangible assets, inventory contacts, short term or inexpensive leases, or biological assets.
- Make policy decisions to help determine the impact of any lease liabilities, assets, or debts.
- Gather copies of current lease agreements. Review and analyze each lease to determine different categories such as buildings, equipment, vehicles, or any other items with service contracts. Review all contract, terms, and other lease information for each agreement.
- Determine who should lead implementation. Make sure to choose an effective team and include all necessary departments in the transition process.
- Set up an effective system for implementation. Determine who will make decisions, when new leases will be reported, how lease information will be reviewed and stored, and what documentation will be included.
- Consider the best solution for your situation. Review current systems and assess possible options to determine the appropriate fit for your company’s needs.
- Plan now to avoid surprises later. Be proactive to face the challenges of the new lease standards and allow plenty of time for implementation with all key departments, committees, and individuals.
The complexity of adopting the new lease standards can be overwhelming, but the professionals at BSB can help you develop a best-practice implementation approach. We are well-versed in the new standard and can assist you with the transition process. Contact your BSB advisor with questions or for more information.