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Private Sector Organizations Face Hurdles as They Prepare for Compliance to New Lease Accounting Standards

ATLANTA – (February 26, 2019) – Though private companies have nearly a year before they will be required to comply with the FASB/IASB lease standard, the challenges faced by publicly traded companies that recently complied should serve as a warning to start implementing the new standard sooner rather than later.

Several key challenges public companies experienced were that they uncovered more leases than expected, many struggled with centralizing lease management, and still others underestimated the time it would take to implement processes and systems to handle the new standard. “Typically, leases are owned by each department, but now you need to find and centralize all of those lease contracts,” said Jared Schwantz, Associate Product Manager at PowerPlan. “The more leases an organization identifies, the less Excel will suffice for management. So, a big part of compliance is utilizing technology to create a centralized process for all of the leases across the organization, thereby helping streamline the adoption strategy and avoid audit risks.”

An additional challenge private companies will face is increased audit scrutiny, as regulators will be a year ahead in experience when it comes to reviewing their financial statements. “Since auditors have been working with the new standards longer, they will be more stringent when evaluating the private company leases,” added Schwantz.

To help with the tracking, accounting and auditing of leases, organizations have turned to integrated software solutions. These enable organizations to analyze different adoption scenarios for the new lease accounting standards, manage full lease lifecycles, and automate processes now and down the road.

For more resources on how organizations can overcome challenges during the compliance process, please visit: http://bit.ly/2BVriBt.