By LeaseCrunch® on September 7, 2021 at 2:38 PM
If your clients use spreadsheets to maintain their leases, you know what a pain they can be. Spreadsheets are error-prone, difficult to adjust and maintain, and increase security and accuracy risks.
Organizations deliberating on whether to use spreadsheets for the new lease accounting standard should know that it’s much more complex than the old accounting standards and that it’s not their only option. We’ve learned from public companies that spreadsheets are not a long-term solution for ongoing lease maintenance, especially when there are lease modifications, which have been unusually prevalent as a result of the pandemic.
In addition, if your clients are using spreadsheets for lease accounting, it will impact you and your bottom line.
Spreadsheets make audits painful
Many CPA firms realized through their experience with public clients that spreadsheets cause major challenges during audits. Due to the complexity of using spreadsheets post-implementation, you might find it necessary to raise audit fees for your clients. One public company told us recently that their audit fees increased by 25% due to the extra work with their lease accounting spreadsheets. And, if you are unable to raise fees in a competitive market, you may see an adverse effect on your realization rates.
As the auditor, you must verify that your clients’ lease accounting calculations and numbers are accurate. You also need assurance that their controls do not have any material weaknesses. When several people work in the same spreadsheet with no validation or security options, there are often version and calculation issues. In addition, a single formula error could create multiple errors on one or more calculations. With the absence of strong internal controls to ensure the accuracy of the spreadsheet, it creates far more work for you during the audit.
When an error or issue is discovered during the audit, there will be rework, which means more time working in the spreadsheet. As former auditors, we know how frustrating it can be to get deep into an audit and realize there is a material control weakness that could have been addressed earlier. We also know you cannot say the organization’s finances are in good shape if you are not confident in spreadsheet calculations.
Why offering lease accounting software to your clients is the best option
The burden of the spreadsheet will not only fall on your clients, it will also fall on you and your firm, which is why we created LeaseCrunch. LeaseCrunch was built by former auditors for CPA firms.
We know that clients will look to you for guidance on the lease accounting standard. In fact, from our conversations with CPA firms, many clients may end up asking your firm to do all the work (at the last hour, no less). This work cannot be done efficiently or accurately in a spreadsheet.
By offering your clients a solution for lease accounting, not only does your firm provide an immense amount of value to the client, but it also allows you to standardize your process around implementing and auditing your clients’ lease accounting. This will save you time, resources, effort and will positively impact your bottom line. If your clients use a variety of accounting tools and spreadsheets, it increases complexity during the audit across your firm. LeaseCrunch’s software gives you, the CPA firm, the ability for collaboration. Unlike other lease accounting software that cuts CPA firms out of the equation and works directly with organizations, LeaseCrunch partners with the CPA firm and offers multiple engagement options, such as:
- The firm can do all the work
- The firm can invite clients into their own secure account to do the work
- The firm can collaborate with the client
It’s also important to keep in mind that LeaseCrunch sets itself apart from other options in the market with the following critical benefits:
- Ease of use: LeaseCrunch is designed for anyone to easily use it, with helpful wizards and on-screen tips throughout the software.
- Cost: While many software solutions make sense only for large lease portfolios, LeaseCrunch is affordable and scalable for any size organization, with pricing based on the number of leases
- Enormous time savings: Easily generate journal entries, quantitative footnote disclosures, a full amortization schedule and more with the push of a button.
By selecting a tool that is utilized by both your firm and the client, you can eliminate confusion and complexity and be confident in the lease accounting calculations done by both your partners and clients.
If you’d like to learn more about LeaseCrunch and how we partner with CPA firms, please schedule a demo and ask about our free trial!