December 2022 LEASE Summit FASB Series Insights
LeaseQuery recently hosted another successful virtual FASB summit. During the free CPE event on December 14, over 800 attendees heard accounting experts discuss processes that will help private companies smoothly transition to ASC 842.
Speakers at the December 2022 FASB Lease Summit included experts from LeaseQuery, Chick-Fil-A Inc., Grant Thornton LLP, EisnerAmper, and Middleby Corporation.
Each session highlighted critical processes organizations need to consider throughout their transition and identified controls necessary for post-transition compliance. Check out the December 2022 LEASE Summit FASB Series Insights page for more details.
Lisa Kaestle, Audit – Director, Accounting Advisory Services, Grant Thornton Center of Excellence Lead
“As far as day two lease accounting, you want to make sure you continue to make your lease population complete, assess your lease terms appropriately, all of that stuff, but you’re also handling subsequent measurement. This could be modifications or different remeasurements.”
Stefanie Parker – Senior Financial Analyst, Middleby
“You don’t want to create a process that is overly cumbersome on top of all the other processes. There are certain requirements for the standard that you do need to meet, some of that is unavoidable, but they all intermingle. You have contracts, you have fixed assets, and you probably already have a lease policy that you are readapting for this new standard. Think long-term.”
“Operations does not stop for adopting this lease accounting standard. You still need to renew, create new leases, and all of that. Test out those procedures on the newer leases or reassessments now because they’re not final, but they’re in place. If you get hiccups and it’s not even an effective transition yet, fix it now rather than on day 2 when you’re in the heat of year-end.”
Sarah O’Sullivan- Senior Director, Product Accounting, LeaseQuery
“How do I continue to constantly monitor our lease portfolio and make our auditors comfortable that we have captured all of the leases? We ended up putting some reconciliations and verification-type procedures into place that we started doing on a quarterly basis. Those are important for day 2. Make sure you capture all those changes.”
Doug Uhl – Senior Principal, Chick-Fil-A Inc.
“Organizationally, how are you aligned? From contract negotiations, through accounting operations, to setting policies and controls, how are those roles and functions set up in the organization? There is a lot of pre-work that has to go into understanding how you are going to accomplish key objectives. I think we were successful because we spent a lot of time preparing.”
“Now that we’ve adopted the standard, it doesn’t end… what are the things you’re doing to prepare yourself for adoption, and how do those processes look post-adoption? How do you maintain that going forward with the knowledge that this doesn’t simply end after you adopt? These decisions and determinations have to be made post-adoption. There are a lot of complexities to unravel.”
William Ryan, Partner, Audit and Assurance, EisnerAmper
“For auditors, one of the biggest things, whether it’s adoption of the second year of implementation, is documentation. We need to understand what the thought process was when evaluating the leases, how they determined that a lease should be finance versus operating, whether they looked at practical expedients, what was adopted. Really, just what the whole approach was to adopting the standard or implementing teh standard in subsequent years.”
“We also want to see how the groups worked together, to a degree. The integration between financial and operating groups within the company has become pretty important with the new standard. So, we would like to understand how they went about determining all the leases were captured and that no leases were missed. What did they do to evaluate the lease agreements and how are they tracking all of their lease data? The lease software that they are using is important”
Attendees of the December 2022 LEASE Summit FASB Series received advice on all things related to ASC 842. Expert panelists gave their best tips for the transition and post-transition audits. Watch the summit recap for more in-depth information on the adoption and audit processes.