Business Perspective: Robert Half
U.S. companies report they're lagging on lease accounting transition
| December 2017/January 2018 Footnote
New standards on accounting for leases came last year after a decade-long endeavor to fundamentally improve financial reporting. With these highly-anticipated regulations in place, all public companies with lease assets, including real estate, ships, aircraft and construction and manufacturing equipment, are required to comply by 2019. The deadline is 2020 for ll other organizations. These standards, aimed at improving the transparency of the reporting of leased assets and liabilities on financial statements, could have a significant impact on many companies' financial operations -- from implementing new accounting policies and processes to deploying new IT systems. Though the deadline for implementation isn't exactly around the corner, the changeover will require a significant effort that companies are strongly encouraged to assess sooner than later. However, nearly a year after the new standards were finalized, a recent survey by Robert Half Management Resources of more than 2,200 CFO found that 80 percent of the respondents' companies have yet to begin the transition.
New research also revealed how companies in Minneapolis stack up against the U.S. When asked if their company has begun the transition to the new lease accounting standard, 19 percent of Minneapolis businesses surveyed said they have started, compared to 18 percent of U.S. businesses However, only 17 percent of Minneapolis CFOs have reportedly begun the diagnostic work necessary to determine the level of effort required to adopt the new standard, compared to 18 percent of U.S. CFOs.
For some companies, the transition will involve systems upgrades, new reporting processes, training, additional hiring and massive change-management effort, which appears to be especially challenging for large companies. Additionally, because the standard's requirements are new, companies are having trouble finding professionals with the relevant skills and knowledge. As the process involves dozen of moving parts that require attention far in advance, some Minneapolis firms are finding themselves a bit behind the rest of the country -- only 48 percent of CFOs in Minneapolis have identified team members and responsibilities for completing the transition to the new standard, compared to 68 percent of CFOs across the U.S.
In addition to managing change, updating technology and training staff, one of the most significant challenges for companies is finding professionals who possess the knowledge and experience to make this transition. Staffing firms like Robert Half Management Resources can help companies by providing skilled consultants who can support lease accounting initiatives. As the standard is still very new, the process requires a professional with a firm historical context rooted in an understanding of current lease accounting rules. Methodological experience in working through changes in accounting standards is also preferred.
Beyond accounting, finance and reporting, the dramatic changes offered in the new leasing standards are expected to have far-reaching implications in areas such as technology and real estate. Since the new standard will affect nearly all parts of organizations, companies must be careful not to underestimate the time and work involved in preparing for and implementing it. Though the deadlines seem relatively distant, companies that haven't begun the transition yet may find themselves behind before they even start. Don't fret. There's no time like the present to start assessing the
mission ahead and mobilizing with knowledgeable professionals.
Visit http://bit.ly/2vILhBE for the Robert Half Management Resources survey.
Contact: Angela Lurie, CPA (Inactive)
Address 800 Nicollet Mall, Ste. 2700, Minneapolis, MN 55402
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