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Home / Blog Articles / [UPDATED] Timeline of the Global Lease Accounting Project Milestones (Infographic)
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Posted: 8th July 2016
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[UPDATED] Timeline of the Global Lease Accounting Project Milestones (Infographic)
For nearly a decade, the International Accounting Standards Board (IASB) and their American counterparts the Financial Accounting Standards Board (FASB) have been deliberating and formulating a new global standard for lease accounting.
The boards have worked long and hard in pursuit of an international standard that provides clearer transparency of companies’ lease liabilities, whilst trying to minimise the costs associated with moving to a new standard. With two exposure drafts, numerous meetings and a great deal of feedback, there have been many interesting developments throughout the course of the project. Now both standards have been published and lessees are taking the preparatory steps for compliance, , Innervision’s leasing experts have put together this useful infographic of all the big announcements so far, as well as what organisations should be doing to meet the implementation deadlines.
The Leases project has undoubtedly been a huge undertaking for the IASB and FASB and will potentially be a complex and resource-consuming task for companies implementing IFRS 16 and FASB ASC 842. Now is the time for businesses to take a look at their current lease portfolio and methods of managing and reporting. In order to comply with the new IFRS and US GAAP lease accounting standards, companies will need to gather the necessary lease data and record and report on their future leases in more detail.
The IASB have chosen 1st January 2019 as the deadline for international companies, however US entities have even less time to ensure they are prepared with FASB deciding on 15th January 2018.
Companies need to produce comparative balance sheet and P&L reports for up to 2 years before the implementation date, which requires historic lease data. This information is not easily accessible for most businesses as many do not have a standardised lease management procedure in place. Therefore, the deadline for businesses to begin preparations is more realistically 2016.
Businesses are being advised by the leading accountancy firms to begin the process of planning and looking into software solutions immediately to minimise the pressures and costs of compliance as the final standards are announced in the next few months.
The easiest and most beneficial way for companies to centralise, report and manage their leases is through the use of lease accounting software. It is vital that lessees have a unified and logical platform for managing the transition process to either IFRS 16 or ASC 842 to ensure the lease data they collect is comprehensive, accurate and readily available.
Innervision’s own lease portfolio management software, LOIS, has advanced lease accounting functionality and is able to run the required outputs of existing and new lease accounting standards. LOIS also creates an “before and after” comparative impact assessment to show how your financial statements will change between the two standards. This information is critical to creating effective and relevant preparations when implementing either IFRS 16 or ASC 842, using real-time data to assess how your business will be affected