Workbook Accounting

Vaco helps private company backed by Private Equity, in the Healthcare Industry, to achieve compliance with the new ASC 842 standard ahead of their required deadline.

  • Client

    Highly Rated KLAS Company

  • Services

    Lease Accounting

  • Areas of Expertise

    ASC 842

  • Industry

    Private Sector

Our Challenge

Early Adoption of ASC 842

The client had to comply with ASC 842, a new standard
governing how leases are reflected within company
financial statements. The most significant impact of the
new standards will be to move all operating leases (real
estate, equipment and embedded) longer than 12 months
onto the balance sheet.

The client had a small lease portfolio consisting of real
estate and equipment. As a private company, they elected
early adoption of ASC 842 with the effective date of
January 1, 2020. The client had to evaluate their options
on how they were going to successfully adopt the new
standard.

Our Solution

Successful Adoption of New ASC 842 Standards

Vaco provided advisory services assisting the client in making
a decision to either utilize lease accounting software or
Microsoft Excel. The client decided that transition and ongoing
accounting would be executed in a Microsoft Excel model
instead of an automated software system due to the small size
of their lease portfolio.

Vaco provided technical accounting knowledge
on adoption requirements, such as Practical Expedients and
Policy Elections. Vaco assisted with assessing the client’s leases
and identifying potential Embedded leases as well as
abstracting all lease data for their current lease portfolio.
Vaco’s consultant designed a Microsoft Excel central
depository/ template to capture abstracted data for current
and future leases. The key benefit of this tool is pre-populated
data validation lists that eliminate human error. The abstractor
is forced to select specific values for certain fields from a dropdown
list. The pre-populated data list also serves as a technical
tool to guide an abstractor through the processes without
intimate knowledge of ASC 842.

The Vaco team then designed a Microsoft Excel Model to
capture transition takedown entries and ongoing accounting
journal entries, supporting Amortization Tables and
Calculations of initial ROU and Liability Balances. The
developed Accounting Model was fully automated to ensure
maximum data accuracy and clear audit trail through various
checks and balances by footing, cross footing and referencing
data from a high level to the most detailed level. This enables
the client to perform an accurate, repeatable, close process.
After Vaco successfully implemented a full technical solution
prior to the client’s target date of January 1, 2020, Vaco
provided training and education on Day 2 Reporting to the
client and their team for continued compliance.

Download the full case study here.