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LeaseCrunch® Survey of Auditors at 77 US CPA Firms

MILWAUKEE, November 2, 2018 – In a survey of auditors at 77 US CPA firms conducted by LeaseCrunch®, 58% believe that the new recognition of a lease obligation will adversely affect loan covenants for their clients.

LeaseCrunch® is the only lease accounting software made by former CPA firm auditors for CPA firm auditors, with a development team made up of CPAs, former Big 4 public accounting auditors, accounting academics and a former FASB staff member. 

Questions asked on survey: 

1) Have you started conversations with clients about meeting the new lease accounting reporting requirements?

Yes 90%
No 10%


(Responses for CPA firms that have started conversations with clients about the new lease standard.) 

Do you have any clients who are, or will be, early adopters of the new lease standard?

Yes, public and private 4%
Yes, private only 22%
Yes, public only 1%
No 72%
69 100%


Have there been any problems with: {could select multiple responses}

Determining which practical expedients should be applied 22%
No problems so far   21%
Book vs. tax implications     17%
Determining the incremental borrowing rate  14%
Accounting for operating leases 11%
Determining the lease term   9%
Don't yet know what problems may exist  6%


2) Have any clients raised the issue of potentially violating bank loan covenants when the new lease standard impacts the balance sheet?

Yes 68%
No 32%


3) In general, do you think that recognition of a lease obligation will adversely affect loan covenants for your clients?

Yes 59%
No 41%


4) Have your clients completed an inventory of their leases?

Yes, completed 14%
Most have started 20%
A few have started 43%
None have started 22%


5) For clients who completed an inventory of their leases, was the actual number of leases more or less than thought?

More than thought 17%
Less than thought 1%
What was anticipated 48%
I don't know 33%


6) Are existing controls at clients adequate to ensure identification, classification, and documentation of existing leases?

Yes, existing controls generally are sufficient 32%
No, existing controls generally will require revision/enhancement 45%
Controls generally have not been documented or tested  23%


7) Do you expect your clients to adopt the package of practical expedients on transition?

Yes, most will elect the practical expedient package  60%
No, most will elect to apply the new standard immediately  3%
Still under consideration   38%


8) Do you expect clients to separate lease and nonlease (e.g., service elements) components within a lease or elect the practical expedient that permits a lessee to combine lease and nonlease components to calculate the lease liability?

Generally expect clients to elect separate accounting and a smaller liability/obligation 8%
Generally expect clients to elect the practical expedient  55%
Too soon to tell   38% 


9) Do you expect private clients to determine an incremental borrowing rate following the revised guidance or to elect the practical expedient to use a risk-free rate?

Generally expect clients to determine an incremental borrowing rate  18%
Generally expect clients to elect the practical expedient and use the risk free rate 40%
Too soon to tell  42% 


10) Do you have any questions about any of the following topics as they relate to the new lease accounting standard: {could select multiple responses}

I have no questions about the new lease standard 22%
Policy elections and practical expedients 18%
Book vs. tax implications  14%
Guiding clients on how to collect lease data 13%
Selecting a software solution  12%
Impact on debt covenants  11%
Identifying and classifying client leases  10%


11) Do you feel the FASB has adequately explained what is required for you to help clients comply with the new lease accounting standard?

Yes 75%
No 25%


12) Does implementation of the new revenue recognition guidance and the new leasing guidance in consecutive years an issue with clients?

Yes, implementation is straining resources   57%
No, there is little or no overlap between the two standards  19%
Too soon to tell  23%


13) With major changes to revenue recognition and leases in consecutive years, should FASB have allowed for more time between initiatives to allow for easier implementation?

Strongly agree with more time between standards  27%
Agree 32%
Neutral 27%
Disagree 12%
Strongly disagree, no need for more time between standards 1%


The survey was conducted in September and October 2018.

For more information go to: www.LeaseCrunch.com



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Press Contact:

John Vita

John Steven Vita Communications