Companies are ready for the leases standard, but only with help of interim solutions, temporary workers and bigger budgets
Most companies expect to be ready to operationalize the required changes needed to comply with the new lease accounting standard. But that’s only with the help of interim solutions, temporary workers and external consultants, and larger budgets.
According to our new Lease Accounting Survey of finance and IT professionals:
Compliance with the new leases standard has become a larger, more complicated endeavor than many companies originally anticipated. From choosing a system and gathering all relevant data from across the organization to deciphering contracts and identifying embedded leases, piecing together the data and IT puzzle, especially for complex global organizations, is core to the challenges many companies face, but also necessary for a successful implementation.
Complexity of data and legacy IT biggest challenges
Data collection is proving very difficult in complex organizations, many of whom have operations both domestically and abroad, which is driving the need for more help.
Was the revenue recognition experience a crystal ball for leases?
After three-quarters of reporting under the new revenue recognition standard, companies may still be feeling the changes.
With leases proving to be an even more complicated process than revenue recognition for some, the effective date isn’t the end of the road. Knowing that most companies are still dealing with the necessary revenue recognition changes two quarters past the 2018 deadline, it’s easy to anticipate that the same will be true for leases.
ACT – automation, collaboration and transformation are key considerations for success
Though adopting the new leases standard has presented its challenges, it’s important to take advantage of the bigger opportunity change like this can bring. At EY, we view leases through the lens of ACT – or automation, collaboration and transformation, which can take you from required change to business value.
About the survey: EY surveyed 304 finance and IT leaders from US-headquartered public companies across multiple industries, with annual revenues ranging from US$1 billion to more than US$10 billion, in July 2018 to highlight the key challenges and opportunities associated with lease accounting standards changes.
Americas Leases Leader