The leasing standard that the Financial Accounting Standards Board released in February is going to require some extra training for businesses from their accountants and could lead to some re-evaluations of clients’ leasing obligations.

“My guess is that for most companies—particularly public companies—their local audit firm probably will offer certain training that will deal with the impact of the new standard,” said Mario Pompeo, partner and leader of CohnReznick’s CFO Advisory Practice. “It’s highly advisable for companies to consider getting their people familiar with the new standard and what the changes to existing GAAP will entail, sooner rather than later. To the extent that these training opportunities are available from their auditors or through their local state societies, I would highly recommend that companies begin to tell their employees—particularly those who are responsible for overall accounting and lease accounting in particular—to get this training.”

His firm, CohnReznick, is already planning on providing such training to clients.

“We have very high-level summaries of the pronouncement and can provide what I would call more of an educational background, but the learning and development group within the firm is most likely going to be developing its own training program regarding the standard, both for our internal use and our clients,” said Pompeo.

He believes other accounting and auditing firms will also want to provide such training to clients as well as their own staff.

“Especially anybody who does external audits, where they will ultimately be opining on the financial statements of their clients, getting their staff trained to also be able to assess what are the differences between the old and the new accounting will be very important,” said Pompeo. “I think every firm, especially if they’re doing audit-type work, will have their people trained on this.”

Pompeo thinks the biggest impact of the new standard will be on retail businesses.

“If they have a lot of stores and boutiques, particularly leases in the U.S. and overseas, this will probably have one of the largest impacts in the retail and consumer products space,” he said. “Following that are companies that are highly dependent on leased equipment.”

The airline industry is likely to see a major impact, as most aircraft are leased. Any company with construction equipment and other heavy equipment will also see a big impact. Even professional services firms that lease office equipment could see an impact in terms of their lease vs. buy decisions.

Differences between the U.S. GAAP and International Financial Reporting Standards versions of the new leasing standard from the Financial Accounting Standards Board and the International Accounting Standards Board could create extra complications for multinational companies.

“This started out as a joint project between the FASB and the IASB, but the ending pronouncements do have slight differences,” said Pompeo. “Anybody that has foreign entities that currently report under IFRS for local reporting purposes will have differences then between their local accounting overseas and their U.S. reporting that they’re going to have to take into consideration. I think this will be very impactful to a multinational that has retail stores or equipment leased in France as well as the U.S., for instance. Unlike the revenue recognition standard, this one did not converge. They are divergent pronouncements.”

Some multinational companies may need to do dual reporting under U.S. GAAP and IFRS. “If they have a local IFRS reporting structure, but they consolidate under U.S. GAAP, those local entities are going to have to dual report,” said Pompeo. “They’re going to have to know what the U.S. rules are and they’re going to have to know what the local IFRS equivalent would be. I wouldn’t say there’s a huge difference, but there are some differences.”

The new standard will give businesses and their accountants the chance to take a fresh examination of their leasing contracts.

“This may be an opportunity to re-look at the lease vs. buy decision, to potentially renegotiate contracts,” said Pompeo. “The way CohnReznick is looking at this is that this shouldn’t be an accounting-only exercise. This is a great opportunity to really look at your entire leasing processes. We have a subsidiary, NOI Strategies, that is looking at overall real estate and portfolio management as well as lease administration when we offer our consulting services to prospective clients. While we’re willing to help people adopt the new standard, we believe this is also a great way to look at the overall real estate portfolio and consider things like maintenance management, space and facilities management, and overall capital project management, and then optimize sustainability. Make this broader than just an accounting issue. Maybe there’s some pain associated with adopting a new standard, but you could actually improve certain of these processes. Optimize your equipment-leasing strategies while also considering the implications of the new standard from an accounting perspective.”