In February 2016, the Financial Accounting Standards Board and the International Accounting Standards Board introduced new lease accounting standards that bring operating leases onto the balance sheet. This standard will impact nearly all organizations engaged in leasing transactions, and companies will now be required to report and disclose all lease obligations and reclassify them as assets and liabilities.

You’ve seen the official FASB documentation and IASB documentation. There are several key takeaways:

• This is a sweeping update.
  • This has caused significant concern about the methodology and effort needed for implementation and compliance – both of which are complex and time-consuming.
• The clock is ticking. Don’t delay!
  • For companies reporting under ASC 842, the effective date for private entities is reporting periods after December 31, 2020. For companies reporting under IFRS 16, the effective date is January 1, 2022.
• Compliance requires change.
  • Organizations will face necessary operational, process, system and reporting/disclosure changes to be compliant with the new standards.

Less than 20% of accounting and finance professionals say they’re ready for the new standards. Are you?

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