ASC 842 deadlines for compliance have been extended to 2022. What does that mean for your business? How can you make use of the remaining time to ensure you meet the compliance deadline?
To comply with the new standard’s requirements (including those related to disclosures), entities may need to implement new accounting software. If you are currently relying on Excel or using software made to only handle real estate, not leases, now is the time to begin preparing your systems for ASC 842.
ASC 842 have a huge impact on how organizations need to manage and report their lease data. The new leases standard will require you to bring more transparency to balance sheets by recognizing new assets and liabilities. However, numerous companies still do not have an ASC 842 software solution selected or they rely on customized spreadsheets. Yet we need to address the risks it brings to your business.
The truth is – you just can’t ignore ASC 842. And here are 3 reasons why.
1) Manual calculation mistakes and errors in spreadsheets could cost you thousands
Although Excel is a fantastic tool, it simply lacks the functionality you need to properly manage your leases and support financial reporting for ASC 842. It’s also worth mentioning that complex calculations and Excel are not compatible – lots of spreadsheets and manual data entry causes mistakes. Companies that manage hundreds of lease agreements spread across several countries should consider automated accounting software tools designed specifically to address ASC 842 requirements.
2) Non-compliance can put your business in danger
Regulations are put in place to ensure that commercial entities act in a responsible manner. Of course, there are countless regulations that change rapidly. Moreover, they are complex. That’s why many businesses tend to treat compliance irresponsibly, with little consideration of the consequences. What are the risks of non-compliance in an ASC 842 case? If your business fails to adopt the new standards, you won’t be able to source credit lines and find investors.
3) “Sorry, there’s no time for you”
Companies that are waiting till the last minute may end up having to line up in the queue for the software providers in order to implement the software for their needs. It’s not that you’re not important – many companies will be affected by the same changes and are looking for the same solutions. You don’t want to begin too late and find out that all the potential providers are simply too busy to help you.
Have you already selected experts to manage your transition? You can’t choose to not comply, but you can choose the right tool to manage your transition. Our ASC 842 lease accounting solution SOFT4Lessee will help you manage lease accounting according to the ASC 842 changes. Contact us!
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