No one wants to replace their ASC 842 software. Adoption of ASC 842 and IFRS 16 was challenging enough. No company implemented new lease accounting software expecting to replace it just a couple of years later. But many are doing just that.
Why? Because many buyers found out the hard way that under-developed systems lacked necessary functionality in these nine key areas. This forced accounting teams to spend countless hours creating manual workarounds in spreadsheets, leading to lost productivity, control issues, and serious audit challenges.
- No Connectivity Between Lease Administration and Lease Accounting Systems. Many companies implemented a separate lease accounting system without connection to lease data. Lease changes had to be entered twice, once by the lease administration team and again by the lease accounting team. This double work was a waste of time and introduced opportunities for errors.
- No Automatic Remeasurements. After initial compliance, remeasurements are a continuous, time-consuming need. Many common scenarios cause compliance-mandated remeasurements. Companies had needed to remeasure groups of leases or the entire portfolios. Users had to create manual calculations for renewals, terminations, and impairments.
- No Systematic Control for Accounting Policy Compliance or Validation of Lease Data. Systems couldn’t test data entered in the application and test bulk uploads for errors before they became big reporting problems. The errors and lack of control created a lot of rework and audit headaches.
- No Automatic Discount Rate Matching. Without automatic matching to company rate tables, accountants were required to research rates and insert them manually, again error-prone and wasteful work.
- No Flexible Reporting and Ability to Add Company-Specific Fields. The inability to customize data fields for non-generic items created another reason to track information in spreadsheets separately. Some businesses also had unsupported financial and portfolio reporting scenarios.
- No Automatic Retrospective True-Ups. For solutions without automatic retrospective true-ups, errors and omissions after month-end close required manual corrections in spreadsheets.
- No Flexibility to Split Amortization Schedules. Systems lacked the ability to break out lease details such as TIA amortization for tax, purchase accounting adjustments, and cease use adjustments requiring more manual spreadsheets.
- No Audit Details in Reports. All systems create a basic Disclosure Report output. Still, without lease-level details needed by auditors being automatically included in standard disclosure, roll-forward, and reconciliation reports, accountants were forced into more manual work.
- No Automatic Journal Entry with Approval Controls, Integrated with the ERP. Either systems couldn’t integrate with ERPs, necessitating manual spreadsheet uploads, or buyers discovered that delivered integrations didn’t work. Also, controls were not automated around the release of the GL outputs.
Lease Accounting with CoStar
If your existing software is missing these essential, time-saving functions – or if you’re looking to implement the company’s first solution – get the system that can do all this and more. CoStar.
Replacing Lease Accounting Solutions
You may remember your initial project as being difficult, but replacing your existing Lease Accounting system is easier than you think. You are ready to replace ASC 842 software.
CoStar is trusted and recommended by more leading accounting firms and service providers to manage and report on real estate and equipment for compliance with ASC 842 and IFRS 16 guidance. If your lease data is already in a database, upgrading is easier than you’d expect.