You’re busy. With limited time and resources, and not enough people on staff, you’re considering passing the monumental task of transitioning to FASB Topic 842 and IFRS 16 on to an auditor and/or consulting firm.
Working with an auditor or CPA has numerous benefits – it saves you time and grants you access to expertise that you may not have in-house. However, if you take a “set-it-and-forget-it” approach to outsourcing, you may be lulled into a false sense of security. Our advice, as accountants specialized in lease accounting, is to keep some control of your lease accounting.
You can let your CPA or auditing firm do most of the heavy lifting, but you still should be able to pull reporting on an as-needed basis, have insights into how the new standards apply to your company, and leverage the new accounting standards to improve operational efficiency outside of the accounting department.
Here are 4 best practices to implement if you’re thinking about outsourcing your lease accounting:
1) Purchase a lease accounting software for your company’s accounting and management activities.
There’s nothing wrong with hiring a CPA firm to assist in the transition. To ensure that the software they use is the best fit for your organization, purchase it yourself and grant them access.
There’s no one-size-fits-all approach to lease accounting. You can minimize disruptions to your business by matching a software of your choice with the expertise of your outsourced auditors.
2) Get direct access to reports and lease documents using your software.
When your company uses software, you can pull whatever reports you need in minutes. Not only does this save you time, but it enables other departments, such as procurement or legal, to be able to access contracts and other critical documents related to your leases.
3) Ensure internal employees understand the new standards.
When outsourcing your company’s transition, it’s about more than compliance. It’s important to have overall lease knowledge – dates (start and end), amounts owed, efficiencies in auditing and reporting, and no duplications.
The new standards are here to stay. You and your colleagues need to develop a deeper understanding of them, as they can impact your purchasing and accounting processes in the future. You can continue to rely on an external firm for support, but no one understands your business the way you do. Developing your internal talent sets you up for success in the long run.
4) Don’t assume because you run a small company that you don’t need lease accounting software.
Company size doesn’t drive the need for a software solution. It’s the number and complexity of your company’s leases that dictates the need. If you have over 10 leases, you most likely will need a software solution. At the end of the day, since most consulting firms use software to manage your lease accounting needs, you should too.
To help in your decision making, review our step-by-step lease accounting Transition Guide. It’ll give you further insight and help take the guesswork out of transitioning to the new lease accounting rules.
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