“If we started implementing the new standards to our breadth of leases in Excel, we would open ourselves up to a lot of human error.”
Why does Excel lead to non-compliance?
The lease accounting standards require accountants to be more transparent – assets and liabilities must now be accounted for and Excel simply won’t cut it. In addition to its rudimentary nature, there are a few other reasons why using Excel can lead to non-compliance.
No matter where you are in your transition, having the right lease accounting software will make tracking your leases much easier.
Because of the amount of documentation needed to stay compliant, Excel is simply not robust enough to accurately present all the information a lease accounting firm needs.
Additionally, there’s no way to account for critical dates in Excel, which could cause you to miss payments or even overpay.
Excel’s limited layers of protection mean that a person could easily gain access to your spreadsheets and eliminate all of the information contained within.
Lease accounting software is built to provide the utmost data security to protect your lease information from being accidently changed or even deleted.
Often, it will employ a two-step process of authentication and will require administrator permission for lease modifications to be saved.
Do you know how accurate your Excel reports are? Often, creating a report with Excel requires you to pull data from one document to another.
Using a lease accounting software allows you to create templates, pull information directly from the software instead of manual entry, and report in multiple standards.
Excel is a great tool for many things, but lease accounting is not one of them. A lease accounting software can help you save time and money during your transition and beyond.
Read our in-depth article on the challenges of compliance with Excel
Other dangers of using Excel for lease accounting
A massive time commitment – when editing your leases in Excel, you can expect to spend 20-30 hours a month. A lease accounting software can reduce that time to just 15 minutes.
Working inconsistently – The owner of an Excel spreadsheet is usually the only person who knows how it was built and how to maintain it. Should they leave the company, all that knowledge leaves with them.
Misinterpreting the new standards – ASC 842 and IFRS 16 are massive guides that each take up over 400 pages. Without an understanding of the standards, errors can easily be made.
Extensive lease maintenance – Updating you leases is time-consuming and opens your company up to human error. Even one mistake will impact the rest of your data.
Lack of an audit trail – Do you know who entered your lease information or who updated it last? This information is imperative to provide your auditors, and unfortunately, Excel doesn’t provide it.