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CFO Insights: Lease accounting — Six questions CFOs should ask now

Published on: Jul 12, 2018

More than a decade in the making, the FASB's new standard on accounting for leases finally takes effect for public companies on January 1, 2019. For many CFOs, complying with ASC 842 — hard on the heels of implementing this year’s new revenue recognition standard — promises to be a race to the finish.

Not everyone is winning. According to a recent Deloitte poll, only 15.6 percent of respondents say their companies are “extremely” or “very” prepared to comply — an alarming number as the deadline for adoption draws closer.

There’s clearly no time to waste. For many companies with leasing activities, compliance with ASC 842 will require investment in new technology or modification of existing technology; extensive abstracting of existing lease agreements to capture new data points; and close coordination with senior leadership in corporate real estate, procurement, IT, and — where applicable — third-party advisors. For some, this may mean adding one or more designated lease accounting specialists to the team. For others, it could mean developing a new operating model for the accounting organization in which lease accounting is centralized.

This issue discusses these options, as well as some pressing questions CFOs should consider asking their chief accounting officers to facilitate compliance as the adoption of the new standard enters its final stretch.

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