Having a lease accounting model or software solution plays a key part in the application of ASC 842. The right solution will depend on your requirements and the volume of leases you have.
RSM has analysed the market to determine the capabilities of many solutions, currently in the market and in development, to meet the requirements - as well as handle other components of lease administration.
Our strategic relationships with several key software providers allow us to discuss software options with you. We can assist with the implementation of the chosen solutions to help with data aggregation, data cleanliness, and support that will drive the timeliness and success of the lease data collection effort.
Whether it be software-based or a workbook, it is important that your lease accounting solution provides you with everything you need.
Key considerations when choosing your solution may include:
- Operational tools
Does the solution offer role-based access, locked journal entries, central repository, and alert notifications?
Where does the responsibility of maintaining the solution lie? How often will the solutions be updated?
- Data integrity
Does the solution offer data entry validation? Does it provide lease change history and prevent duplication?
- Accounting intelligence
In addition to calculating the right-of-use asset and lease liability does the solution recognise the application of practical expedients and provide useful life charts?
Does the solution deal with the transitional adjustments and considerations as well as the ongoing accounting?
Does the solution automatically provide you with the journal entries you need? Are these journal entries available on a monthly, quarterly, annually basis?
Can the solution report key information in an effective format giving a clear audit trail?
Does the solution include specific reporting functionalities enabling periodic reporting by lease, legal entity, business unit, asset class, and/or currency, on a periodic and year-to-date basis?
- International considerations
Does the solution offer IFRS transition methods, or multicurrency and translations?
- Volume of contracts
Can the solution handle the number of contracts you have? Is the functionality of the solution excessive for the number of contracts you have?
How does the cost compare to the benefits that you value? Would you be paying for functionality that you would not use.
- Advanced reporting
Does your solution produce disclosure reports for all compliance standards?