Lease Accounting Services
The new lease accounting guidance presents an opportunity to proactively implement new processes and policies while simultaneously taking inventory of your Company’s lease populations, and assess the impact on future financial reporting.
Services include: data extraction, process mapping, internal controls, change management, software advisory, software readiness, financial impact modeling, and impact analysis on debt covenant calculations.
Here are a few quick facts about ASC 842.
- Effective Jan. 1, 2019 for public companies.
- Effective Jan. 1, 2021 for non-public companies. (tentative decision pending comment period expected to be finalized September 2019).
- All long-term operating leases will be presented on the balance sheet.
- Financial statement disclosures will be expanded.
LBMC’s 3 Steps to Prevent Costly Implications From Lease Accounting Standards
Take Inventory
The new standard stipulates that you have documentation on every lease your company has entered and gathering the required data is a massive undertaking for most. Under the new standard, other contracts will also need to be considered for potential embedded lease agreements. Examples of contracts that may contain previously unidentified lease components which need to be analyzed are service agreements, bundled service arrangements, and data service arrangements. Waiting until the last minute will put an overwhelming burden on your accounting team, and you may come up short. Get boots on the ground now so you have time to complete the process.
Implement a New Process
Once you’ve finished taking an inventory and documenting your leases, implement an updated system that accounts for the new FASB requirements. Consider using software to automate the process, and consult an expert who understands the nuances of the new standard to make sure you are compliant when it takes effect.
Communicate with Stakeholders
Discuss the implications of the new standard with your investors and lenders now. Don’t assume they are well-versed in all the complexities – or even know about the FASB changes. They may rely on experts to stay informed. If you don’t feel you can effectively communicate the intricacies of the new standard to your stakeholders, bring in an expert to lead the conversation. If debt covenants need to be modified, it’s better to find out now while you still have time. Be proactive to ensure a smooth transition.
As the clock is ticking, it’s advisable not to wait to begin taking steps. A year-end audit is a perfect time to ask your auditor what you need to do to prepare for these changes. Consult an expert who knows the standard inside and out so you don’t leave anything on the table.
Industries
Healthcare
- Acute care/hospital
- Behavioral health
- Dental
- Dermatology
- ER services
- Healthcare IT
- Home health
- Hospice
- Life sciences
- Managed care
- Medical devices
- Nurse/staffing
- Physician practices
- Physical therapy
- Surgery centers
- Urgent care
Manufacturing
- Metals and Plastics
- Automotive
- Packaging
- Printing
Services
- Business services
- Distribution
- E-Commerce
- Professional services
Technology
- SaaS
- Web services
- Hardware
* Representative sample, not intended to be all-inclusive.
Contact Us
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Brentwood, TN 37027
Mailing Address:
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Brentwood, TN 37024-1869
Phone: 615-377-4600
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Chattanooga, TN 37450
423-756-6585
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Knoxville, TN 37922
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Memphis, TN 38137-1499
901-685-1040
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Louisville, KY 40202
502-585-1600
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Charlotte, NC 28273
704-846-6750
We’re happy to answer any questions you may have on what our team can do for you. Please send us a note using the form and one of our professionals will get back to you promptly.