By Jess Vento on April 6, 2021 at 9:00 AM
Your clients are hopefully well aware that implementation of the new lease standard is just around the corner. However, some of your clients may have forgotten or may be waiting until the third quarter—or later!—to worry about it.
If there’s one thing we learned from public companies implementing the new lease standard, it’s that waiting until the last minute adds more stress and risks audit problems down the road.
Your clients rely on your advice to guide their actions. Encouraging them to take steps today to prepare for the new lease standard not only helps their team but also relieves audit fee pressure on you, come next year.
Help clients adjust their mindset and get ready for the new lease standard while there’s still plenty of time.
Remind clients of the start dates
The implementation date might seem like it’s still far off, but we’re already in the second quarter of 2021. The table below lists when the new lease standards are effective for the following fiscal year.
|New lease standard||Effective for fiscal years beginning on or after||Notes|
|ASC 842||December 25, 2021||This effective date is for non-pubic companies. Public companies are already using the new lease standard as of fiscal years starting after December 15, 2018.|
|GASB 87||June 15, 2021|
|GASB 96||June 15, 2022||
This standard applies to subscription-based information technology arrangements.
|IFRS 16||January 1, 2019||Already in effect.|
Schedule a meeting to develop a plan
Don’t just send an email reminding clients of the implementation date—grab their attention with a meeting where you can run through upcoming tasks together. A great starting point is the LeaseCrunch roadmap to successful implementation, which includes a list of items your clients need to do for the new lease standard.
On that roadmap, a few items have created particular challenges for organizations that already needed to adopt the new lease standard.
- Bank loan covenants. Debt ratio calculations for many organizations will be affected by the new lease standard. Help your clients avoid covenant violations by talking to their banks prior to implementation.
- Lease identification. Because operating leases were not on the balance sheet, organizations weren’t always diligently identifying and disclosing all leases, especially leased assets embedded into service contracts. To simplify the identification of embedded leases, offer your clients this free tool.
- Length of existing leases. Under ASC 840, maturity schedules are supposed to reflect the reasonably assured term, including either lease termination or lease renewal clauses. Instead, they often only reflect the original lease term. If clients review and adjust lease terms now, they can adopt the new lease standard using practical expedients that will simplify implementation.
Ready to start the planning process? Share this roadmap with your clients to help them get started.
Share useful information and resources
Offer your clients a library of resources without having to create the content yourself. LeaseCrunch provides a variety of online resources for CPA firms and their clients to use when navigating through implementing a process for the new lease accounting standards.
Below are just a few of the tools and resources available on our website that your clients will love:
- Embedded lease identifier
- Readiness assessment
- Lease audit checklist
- ASC 840 to ASC 842 side-by-side financial statement impact
Show clients how you’re making the transition to the new lease standard simple and easy
If your clients are overwhelmed at the prospect of preparing for the new lease standard, reassure them by showing them your plan of action. Let them know you have a solution to help them implement the lease standard efficiently and easily.
A short demo of LeaseCrunch lease accounting software can go a long way in easing client concerns, showing them just how easy it is to use. Once they see how easy it is to generate footnote disclosures with the push of a button, they’ll quickly realize why spreadsheets are not the answer.
Need a refresher? Scheduled a demo and Q&A session on how to use LeaseCrunch (hint: it’s easy!) and what your clients need to know about the new lease standard.