Private or public. Ready or not. A lease accounting compliance audit may be coming your way.

Right now, you might be one of the 5% of public companies in FASB ASC 842 post-transition mode. Or you might be in the majority of public companies who are somewhere in the grueling depths of compliance.

If you’re a private company, you’re probably feeling a false sense of security created by recent news of a delayed deadline.

Either way, there’s an elephant in the room: Will you be ready for an audit?

The final month of Q3 2019 is here. 

And in just the past two months, there have been a lot of changes flying around when it comes to lease accounting compliance.

Because of all the decisions being made around the new lease accounting standard recently, it can be difficult to keep track of what everything means and how it affects you. 

We’ve got you covered.

As experts in lease accounting software, our team stays updated on the latest in lease accounting and on the details of any policy, standard and rule update. 

With that in mind, here are the top stories and informative articles that reveal important information about lease accounting compliance. Use them to inform your decisions for the rest of the year, and beyond. 

Lease accounting compliance is a tall order.

Whether you’re a public company getting ready for round two of reporting or a private company gearing up for implementation, the FASB ASC 842 standard can’t be ignored.

And for good reason.

Turns out, there’s been a major miscalculation about deployment time for lease accounting compliance.

In fact, very few companies are ready.

When PwC conducted its 2018 accounting survey, 34% of companies were still early in the assessment phase with 6 months to go. 83% were less than halfway complete with the project. And one-third were unsure or doubtful they'd meet the effective deadline.

It’s time to get real about implementation, processes and controls to execute the new accounting standard accurately and on time.

It’s a slow clap for companies who’ve implemented the new lease accounting standards.

That’s because most organizations made a mad dash for the finish line. In an October 2018 survey by PwC, more than 15 percent of public companies hadn’t even started implementation of FASB ASC 842 that took effect a few months later.

Private companies aren’t far behind.

News of a deadline extension - most likely due to procrastination and an overwhelming to-do list - is hot off the press.

Even for those who did meet the compliance deadline, most would admit it was little better than a hack job with an all-hands-on-deck approach and little-to-no expertise directing the veritable financial circus.

With 6 months to go before public companies submit reporting under the new FASB ASC 842 compliance standards once more, it’s time to start the cleanup process.

Companies must push themselves to rework the way their team functions to create processes, procedures, and controls for long-term success under post-FASB ASC 842 implementation.

A palpable sigh of relief went through the accounting world last week.

As of July 17th, the Financial Accounting Standards Board (FASB) voted to extend the deadline for its ASC 842 compliance.

Private companies get another year on the clock for ASC 842 compliance.

This move by the governing board to transition the deadline to January 1, 2021 presents some serious questions. After all, public companies didn’t receive this generous offer. Their compliance deadline remained set in stone for the beginning of 2019.

So why did the FASB decide to initiate this roll back? It’s a tricky question fraught with complications and complexity, much like the new lease accounting standard itself.

On the surface, it makes sense why private companies are welcoming this update to the schedule. There’s a pile of challenges even the most fearless accountant wouldn’t want to tackle. 

But dig deeper into the effects of the decision, and you might question if it was a good idea after all.

More than 80% of American companies lease equipment rather than purchasing it.

That’s a big number.

And the reason you should care about it is even more significant. When your compliance deadline rolls around, all of your equipment leases will have to be noted on your balance sheet.

In the past, this treatment was reserved for capital leases only.

But now the Financial Accounting Standards Board (FASB) and its sister governing boards have also decided operating leases - including equipment leases - should move out of the footnotes to join the party on the balance sheet.

But just what is an equipment lease according to the accounting governing boards?