LeaseQuery recently hosted a free virtual summit to highlight the transition to ASC 842. On December 16, 2021, over 800 attendees received valuable insights from professionals with impressive accounting, financial, and technology backgrounds.
Speakers at the 2021 FASB LEASE Summit included experts from LeaseQuery, accounting firms RGP, Baker Tilly, DHG, and manufacturer Middleby Corporation. Attendees left the summit with the knowledge necessary to complete their adoption of ASC 842 and conduct their first audits under the new standard.
What was discussed at the 2021 FASB LEASE Summit?
The FASB Series focused on helping private companies adapt to recent accounting changes. In the sections below, we have highlighted some of the most helpful quotes about the ASC 842 transition and tips for future audits. If you’re seeking more detailed information, you can check out the 2021 FASB LEASE Summit Recap page.
Cheryl Levesque – Partner, CFO & Business Advisory, DHG
“How do you currently keep track of the leases you know about? How do you identify new ones? If you enter into, say, a new real estate lease, what’s that process? Where do those copies of the leases, or even contracts, for that matter, reside? Clients underestimate the time it takes to locate and put your hands on these actual documents, depending on how good you’ve done just keeping a repository.”
“It’s great if you’re a company where everything goes through procurement or legal, and you have this great repository that keeps everything, but if you don’t have that situation, you need to think about who can enter into these types of agreements. I would encourage you to cast a wide net because it’s easier to start wide and take people off the list if they really can’t enter into contracts than to narrow your population too small and maybe miss something.”
“Think about if you’re currently having to disclose your lease obligations under 840, where do you currently gather the information from? That can give you some insights on where to start.”
Stephanie Parker – Senior Financial Analyst, Middleby Corporation
“Taking a deep breath was number one. I would also say, doing it in phases, that was huge for us. It’s similar to a fitness goal, make yourself small goals and achieve them along the way versus making this one giant task that’s gonna make everything super daunting. I would start there.”
“It is daunting, but it is doable. We took all the leases and located each one. It helped us create new processes and improvements going forward…we had some pushback from some divisions, which you’re probably gonna see because change can be difficult, but once it was done and we got in the swing of things, people started to appreciate it.”
Wesley Williams – Accounting Manager, LeaseQuery
“First thing we want to do is lock down that current process. We want to centralize all of our lease records. I hope most people have already identified all of their leases, but we’ve talked to plenty of people who have not. Things have come up, so now we’re trying to find all of our leases before this transition date comes. That’s gonna be the most key part of this transition, and from what we’ve seen, the most time of the transition is just getting all your lease records in one place. Start there and make sure you have a good, complete portfolio of your leases.”
“58% of people uncovered a number of embedded leases during their audit prep, so it’s a common thing to find embedded leases, whether its a dumpster for a service contract with the organization taking your trash, whether it’s security cameras, whatever it may be, there’s a long list of potential embedded leases. Make sure you’re identifying them properly.”
“I’ve hit on this so many times because it’s so important, and often, is overlooked. Make sure you have the proper supporting documentation. Make sure you’re documenting those things, the test of classification, whether it’s your policy or whatever it may be, that lease calculation, how you’re identifying leases, the list goes on and on. Make sure you have the supporting documentation for those pieces. It’s a really big area to think about.”
From a Q&A session with speakers to a detailed walkthrough of the transition process, attendees of the 2021 FASB Lease Summit heard advice on all things related to ASC 842. Expert panelists gave their best tips for the upcoming transition. For more in-depth information on the adoption and audit processes, watch the summit recap.