Question

PLEASE ANSWER IN A 500 WORD RESPONSE!

If you were the controller CFO, or VP of finance at a larger organization, what actions would you take as a result of the changing lease standards?

Answer 1

• Setting up a strong project implementation team to evaluate all aspects of the new standard including investors communication

• Determining all the areas which requires judgement and decision making. Companies will be required to make at least 5 to 6 policy decisions to fully implement the standard.

• Preparing a repository of all current finance and operating lease arrangements – including details of lease terms, escalation clauses, security deposits etc.

• Identifying current service arrangements – not treated as leases under existing GAAP reviewing current accounting positions related to lease accounting taken by the company.

• Building strong process and controls to ensure the accuracy and completeness of the lease database.

• Identifying the other data requirements such as non-lease component, rate to be used for discounting, details required for enhanced disclosures, appropriate IT tool / enabler for straight-lining of rentals and on-going maintenance of existing / future lease arrangements.