4 tips to help boost your FASB compliance readiness


The new accounting standard has brought with it the need to adopt new technologies as well as modify existing ones. It also raises concerns about the abstraction of additional lease clauses and the need to change business processes. As a result, companies, both private and public, are facing numerous challenges surrounding the new accounting standards. Here are some tips that will facilitate the implementation process.

Take your cue from public companies – While public companies new accounting standards compliance clock has already started ticking, private companies have a more lenient deadline. The good news for private companies is that they can learn from the missteps and successes of public companies. Learning about the public companies challenges and issues will be helpful for private companies while planning their own implementation process.

Locate all leases – The new accounting standards mandate the extraction of additional lease data that companies had not required before. This has become a challenge for companies who are finding it difficult to locate leases and supplementary documents that were damaged or misplaced. This data gap might have extensive financial implications. Taking an inventory of all the leases and additional documents will be a good start.

Organize and manage lease data – Many companies have agreed that most of the lease data was managed manually, unaided by any software. Identifying and implementing the right lease accounting and lease administration software will help minimize errors and help identify gaps in the available data. Also, there is always a new lease that has been signed, or a lease that has expired or needs renewal and these changes need to be captured in the system in a timely manner.

Project management – While some companies have the capability to handle the implementation process in-house, others might still be reviewing their resource requirements. Understanding whether to use existing resources or hire additional staff or taking help from service providers is one of the most critical steps in the implementation process.

While the struggle to implement FASB ASC 842 is real and daunting, companies can take heart that every right step taken towards FASB compliance can be leveraged for better decision making in the future.