ASC 842 Compliance: 7 Lessons Learned from Public Companies
Whether you are a private or public company, FASB ASC 842 requires careful guidance to ensure your real estate, equipment and embedded leases are compliant.As the leading strategic location management provider, Tango Analytics synthesizes its in-depth expertise in predictive analytics to help you avoid common compliance pitfalls.
Tango recently discussed how to create and implement the ideal compliance strategy in our webinar, Getting Compliance Right: Lessons Learned from Public Companies. Our panel of experts featured in this webinar includes Karen Wiltgen, Principal at RSM US LLP,Bart Waldeck, CMO and SVP of Product Strategy at Tango and Rick Zelinsky, VP of Product Strategy at Tango.
Tango’s knowledge of lease administration and lease accounting is trusted by companies around the globe. In fact, we count one of the largest restaurant groups in the world as one of our clients – and as one of our best downloadable success stories. Below, our panel of experts share the top seven lessons and best practices they have learned from guiding clients across all industries through successful ASC 842 compliance integration:
- Know Your Internal Processes and Sell the Project to the Entire Business
A big chunk of prepping for successful compliance integration is getting in front of your budget cycle. Also, make sure that you can sell the effort to the CFO and other stakeholders – you need to get the entire business engaged in this critical effort.
- Non-Real Estate Leases are the Long Pole in the Tent
Inventory your assets sooner rather than later! This is essential so that the data can be recognized as part of the ASC 842 disclosure. Also, Short Term leases will now exist, so organizations will need to develop a dollar threshold (instead of duration) to book deferred rent as many of them will be material.
- Practical Expedients Decisions Impact Data Requirements and Abstraction
Develop a plan to determine which expedients will be adopted by the organization and require additional data. Document your company’s procedures over the completeness of its population in a format that can be easily shared with external auditors you will partner with for ASC 842 compliance.
- Getting the Data Puzzle Right is Everything
Ensure you understand the data requirements for compliance at the offset. One-third of data needed will not be in your master lease and will require you to go “off lease” to acquire this data.
- Plan on Integration Scope Creep
Loop in your general ledger and produce a detailed integration design blueprint for how your company plans to tackle compliance, including the scope of the integration. It’s standard best practice to cast a wide (and detailed) net for lease compliance.
- Testing: Painting the Plane While Flying
Pay careful attention to the details between ASC 842 and ASC 840. Make sure you thoroughly review how the differences will be supported so your company’s transition will be quick and successful.
- Crossing the Chasm: Have a Detailed Transition Plan and Timeline
Slow and steady wins the race – ASC 842 compliance is not a process you want to rush. Give yourself four to six months to complete the transition. “Dry run” tests are a great strategy to ensure clarity on the many moving parts of the compliance process.
Discover more tips on how to strengthen your company’s compliance strategy by watching our full on-demand webinar.