Only 9.8 percent of financial and accounting professionals say their companies are prepared to comply with the new lease accounting standards, according to a new survey by Deloitte.
Moreover, only 15 percent of the 5,400 financial and accounting professionals polled expect compliance to be easy.
The survey found the top challenges to lease accounting implementation to be collecting necessary data on all organizational leases in a centralized, electronic repository, cited by 33.3 percent of the respondents, and instituting reporting processes to evaluate quarterly adjustments for the balance sheet, along with profit and loss statements, cited by 20.5 percent of the poll respondents.
Industries with more than half of respondents expressing concern included retail and distribution (61.2 percent); automotive (59.3 percent); telecomm (56.9 percent); process and industrial products (54.4 percent); travel, hospitality and leisure (53.9 percent); consumer products (52.4 percent); health care providers (51.7 percent); and power and utilities (50.7 percent).
“Following the release of both new lease accounting standards, it’s clear that creating a centralized, electronic repository of all equipment and real estate leases held should be a priority for companies with leased assets,” said Sean Torr, advisory managing director and lease accounting services leader at Deloitte & Touche LLP, in a statement. “Those organizations facing the fastest compliance timeline are publicly traded and operating on a calendar fiscal year. Many are spending the balance of 2016 consolidating lease data so that calculations can begin in early 2017, as ultimate compliance with these new rules in 2019 will require lookback reporting for 2017 and 2018.
"While the new lease accounting standards may seem a niche accounting or finance concern, they are not," he added. "I’d encourage any leader of an organization with real estate or equipment leases to take the time now to learn about the potentially broad-reaching impacts of these new accounting requirements. Compliance will likely require input from multiple stakeholders from different parts of the organization. Having top leaders’ support could really make a difference in successful implementation.”
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