How Lease Accountants Can Focus on Learning, Become Experts and Help Others

Matt Waters: Hello, and welcome to the lease alert, where we have conversations with the smartest, most interesting people at the intersection of real estate, leasing and accounting. I'm your host, Matt Waters. Let's learn something together. 

Our guest today entered the accounting profession at a younger age than anyone I have ever met and never looked back. Khalil Bouban led lease accounting change at one of the biggest companies in the world and now his passion is sharing what he has learned with others. 

Khalil, welcome to The Lease Alert Podcast.  

Watch the podcast here!

Khalil Bouban: Thank you, Matt. Pleasure to be here. And with that kind of introduction, I'm going to have you do all my introductions, personal and professional.  

Matt Waters: Happy to do that.  

We'll have to give a few things about Khalil that I will let the audience know up front. Khalil not only started into the accounting profession younger than any person I've ever met, I can say with certainty, he is also the only person I've ever met who has an accounting-oriented license plate. If you live in Atlanta, you see a car driving around, you might think it's Dr. Something. Some people say that it's Driving and Crying, the band, but his license plate ... Khalil, I'll just let you tell what the license plate says.  

Khalil Bouban: It has the D R and C R, so “debits and credits,” is what it’s really meant to be, but I also sometimes get doctor, and I say doctor and coroner as a joke. 

Matt Waters: Well, I think I would rather have debit and credit, than doctor and coroner but our VP of Marketing at CoStar Real Estate Manager, he thought it was Driving and Crying, a rock band, so I thought that was a pretty good guess, too.  

Khalil Bouban: I listened to that group after he mentioned it, and I starting to like them. 

Maybe I'll repurpose that or say that it means two things.  

Matt Waters: It's pretty good. Then we can keep people guessing.   

Khalil, I've already teased this enough, saying that you got into accounting at an early age. Why don't you tell us about that? How did you get into accounting? 

Khalil Bouban: Growing up in Israel, when you get to high school, you have to select a major. There's a couple of main tracks.  

One is to go into engineering and it’s that kind of stuff. The second one is to do office management and accounting. I kind of had the passion for accounting from seeing movies with accountants in them. 

Plus, I had a family relative that was also an accountant. She basically talked about her job and stuff like that. I had some kind of passion towards it to begin with. I wanted to do that. When it came time in high school to select my major, and it's just a stepping stone towards college, that way you have a head start, I said I definitely want to do accounting. 

However, what I found out is when I was about to sign up for the course is that particular track, it's usually the guys tend to go towards IT and engineering. The ladies tend to do the accounting and office management. I was almost going to be the only guy in the class. 

I kind of buddied up with a couple of my buddies and said, so it's not difficult, let's all of us sign up for it. It'll be three of us and it doesn't look weird or anything like that. We agreed on that and we all went and talked to our advisors and all of that. The first day of class, we were all sitting down and the teacher for the accounting and office management came in and said, “okay, anybody that's here for the accounting office management stay, everybody else go ahead and leave.”  

I look around and my two buddies had left already. They did not sign up for the class for the next three years. I was doing accounting and part of doing that course, you also needed to learn how to use the typewriter and be fast at it. 

Now, this is not going to be a story where I tell you I was the fastest typewriter. As a matter of fact, I was horrible at it, the typewriter. Changing the lines and the ribbons, back in the late eighties, early nineties, it was a quite a challenge, but I talked through it because I just loved accounting and I'm happy I did. 

Matt Waters: We're all glad that you did too. It is a funny story, and I think we can all think back to high school and those situations where you look around and you're the only guy there or the only girl there or something like that.  

I think it brings up an issue that prevails even today, not so much boys versus girls, because I know a lot of men who are accountants and I know a lot of women who are accountants, but I think the issue that's still around today is this concept of there's two tracks related to somebody that's good at math. 

You know what I mean? Is it really accurate to say, well, you can take in the STEM track, you know, science, technology, engineering, mathematics, or take a business track, which in many cases will include accounting, right?  

I heard this on a webinar the other day, somebody said, well, why don't we call it STEAM? Why don't we change the acronym from STEM to STEAM? Then we can include the A for accounting. I think that's a fantastic idea because folks that are good at math and thinking through complex scenarios, people that like order, they that can very easily propel you into architecture or engineering, mathematics, even some types of medicine to some extent. Chemistry, right? Or accounting.  

I think that is a good idea. I don't know that I've heard anybody else use that STEAM acronym very prevalently, but I think it's great and we really do as a profession, as accountants, we really need to talk in a more interesting way about what we do, right? 

The stereotype of you're meeting somebody for the first time, you say, what do you do? Then they say, what do you do? You say, I'm a CPA. If it's anywhere in the first quarter of the year, they're like, I know you're really busy filing tax returns this time of year, aren't you? 

I know for me, at least I'm like, actually, no, I haven't filed a tax return in my whole career. But we need to be a little better at being more interesting about talking about our profession and break down some of those stereotypes that really go way past the way it was in Israel in those days, right? 

Male versus female. The stereotypes today persist, but I think it's more what's interesting, what's exciting and what's not exciting. Accounting can actually be very exciting.  

Khalil Bouban: I totally agree. I don't say I was groundbreaking or anything like that, but now there's more folks in Israel are going through these courses and it's no longer one way or the other. 

It kind of evolved, obviously. But I'll say that there's a lot of stereotypes, like you said, about accounting and we're seeing that in the market where there's less and less people getting into that field because maybe they don't think there is a payoff for that or anything like that.  

To me, when I got here to the United States, I just wanted to continue my journey and I wanted to get the CPA exam done so I can get my CPA certification, obviously. The funny thing that happened is that when I started studying for the CPA, it's just one thing. I'll go through it, and it'll be done. 

It was a long journey and a challenging journey because I did a couple of things that weren't sound at the time. I kind of started with BEC, the one part, and then I said, you know what, let me try to speed it up and I'll do the audit and FAR on the same day. I'll study both, they're related, you have your financials and you have somebody auditing the financials. 

It seemed logical to have them both as one study and just go take them together. I went in and sat for the FAR one and that's four hours, took a half an hour break and jumped into auditing. That's another four hours. It was annoying to do them both on the same day. Needless to say.  

By the time I got to the second one, I did not fare well. The thing is, if you don't get back right into it and you get discouraged and you wait, they start to drop off, even the ones that you passed. Five years later. I picked it up again, this time I did it the right way where I did one at a time and I got a 74, which was one point away from passing, which is 75. 

I was like, darn it. But this time I did not let it sit and I went back and took it again and passed and got all my formal parts and passed the CPA exam. That to say though, is even though it's challenging, if it was easy, everybody else would be doing it. But it's challenging, but it's also rewarding.  

It's kind of like the top of the mountain, right? Everybody wants to climb a mountain and reach the top. It is challenging, but I think it is also rewarding and satisfying to accomplish the top of the profession type of thing. It's definitely worth it.  

Matt Waters: Absolutely. I agree wholeheartedly. I'd say if anything over the course of my career has, if any one thing has given me an edge, it's that CPA credential because it instantly establishes credibility, right? 

You really can't pass that exam without showing an incredible amount of dedication to getting the subject matter crammed into your brain and then the discipline to do that in the right order. And have some strategy to take the exam - perhaps not on the same day. If you have that option, it really just shows you in addition to mastering concepts, which is very important, it also shows that you can set your mind to something and accomplish it.  

I think that that really shows up when it comes time to apply for opportunities and promotions and things like that. It is just instant credibility for quite frankly, the rest of your career. You will have that.  

We hear a lot of talk in the media about taking away some of the barriers to entry and students don't want to have to sit through that exam process. I just encourage people to rethink that. It is hard, yes, it's hard, but it also proves something, and you'll have that for the rest of your life. It's hard, but in my experience, it's worth it. 

Khalil Bouban: Absolutely. One tip I'll say is, the exam may look scary because it's a lot of information, but one analogy was, it's like an ocean that's about one foot deep, so you don't really have to get deep. Deep knowledge of everything is just very, very vast. There's a lot of things to know, but you really don't need to get really deep into any specific item.  

You need to know everything because reality is, you get the test, you get your license, but wherever you end up working, you expand your experience specific to your particular specialties. That's really where you get all that information, but having the certificate is weeds out people that are in it just for no passion versus people that are really passionate about it and willing to go through all the challenges. 

The one mistake that I did when I had the 74 I was thinking, I'm not going to focus on the government accounting, because who goes through the CPA to end up working for the government, that's very low pay and all of that. I kind of avoided it, but it seemed like when I took the exam, every single question was about government. 

Maybe it's just because I wasn't prepared for it. It seemed that way. But I would say touch on everything and you don't really need to focus on specific things, but just touch on everything and you should do fine.  

There's so many more opportunities for accountants

Really!

There's so many more opportunities for accountants

Matt Waters: I remember thinking the same thing about lease accounting. I was like, who's ever going to use these bright line tests about capital versus operating leases? I'm going to memorize this and then promptly forget it and never use it again in my whole career. Of course, as you know, I've worked in lease accounting specifically for about 20 years.  

Khalil, I want to get into some more recent experience, not the most recent experience, but I do want to talk about your time at The Home Depot. 

I also worked at The Home Depot and on my first day at a big company like that, at the corporate headquarters, we call it the store support center. But there were thousands of people that work in the store support center for Home Depot in Atlanta. Three big buildings, multiple floors. 

Orientation pulls people from all different departments. You can think of that as just any big company orientation, just painting the picture here. But it turns out when I went through orientation, there were people there from IT and HR and the store centric departments, like merchandising and things like that, and there was one other person there from the accounting area. 

That one other person was Khalil.  

When we did our introductions that day, we both stood up and said, I'm Matt Waters, I'm going into accounting here at Home Depot. Then a few minutes later, Khalil stands up and he says, I'm Khalil and I'm going into accounting here at the Home Depot. 

At lunch that day, I think we ended up talking as we're the only people there from accounting. Just a bit of a fun story. Now, we have worked together for many years. 

Khalil, I'd love to hear about your journey, about how you made it from that high school class in Israel on through to The Home Depot and then tell us a little bit about what you did and ultimately the biggest project you took on at Home Depot. 

Khalil Bouban: I would say when I started at Home Depot, I started as a staff accountant initially and kind of progressed from there to senior accountant. Any accountant listening to this will know the progression, senior accountant to supervisor and ultimately, as Matt had, I was the manager for real estate accounting and leases. He dealt with leases at the time.  

When he left, there was a manager in between us that also ended up leaving. I took on that role for lease accounting. To me, it was a natural progression because it was kind of getting more challenging and more challenging. When that spot became open, I was like, sure, I'll take a shot at this. How hard can it be?   

It's just lease accounting. It's ASC 840. You don't have to worry about operating leases. Just focus on finance leases. You're done. Lo and behold, a year later, everything kind of turns upside down. ASC 842 gets introduced and now you’ve got to start upending everything. 

You got to look for software to do everything that you have to do, which involves talking to all your partners, the FPNA, the reporting folks, you have to talk to pre crew procurement. Kind of get a handle on all the equipment and leases that Home Depot has, and to put it in perspective, we had about 1,100 property leases, but 60,000 equipment leases. 

That was a big, big challenge. Property leases tend to be a little bit easier to manage. They're pretty straight out. You have your fair market value given to you by appraisers, and you have the information that you need and the contracts are easy to read. They're pretty standard because the legalese are kind of universal. 

But when you deal with the equipment ones, it's all over the place. You're dealing with printers, you're dealing with forklifts, you're dealing with trucks, it could be anything you can think of. Now you got a corral, because it wasn't one department managing all the equipment. 

It was different departments managing different type of equipment. The contracts were in different languages as well for international stores. You had to understand all of those and kind of try to make sure you're not missing anything, trying to analyze them to see, are they leases? Are they regular contracts, are they embedded leases? 

All that stuff was brand new to the point that even our auditors - KPMG at the time - were learning as we were learning, right? Everything got scrutinized, everything went back and forth because we were all doing it for the first time in 2019. 

It was an absolutely a nightmare, but also an awesome challenge because it kind of made me even grow and say, I'm going to go right through this. I grabbed every article that's out there, everything that you can read about it and learned it to the point that I can do this in my sleep now. 

At least now I can, but then it was a lot of growing pains. I'm glad I went through it. It really was not easy and kudos to any company that got it right and we're able to go through that.  

Matt Waters: I love the way you kind of framed that up. You can look at it, and many times living through some big project and big change like that feels like a nightmare, but if you really change your perspective just a few degrees, you can see, oh, wow, this is actually a huge opportunity. For sure a challenge, but I'd say that opportunity in many ways, regardless of how, where it comes from, in this case for you, it was through lease accounting, that kind of huge challenge, huge opportunity, can actually help you learn so much about your own abilities. 

It expands what you thought was possible from a lot of different perspectives, your own analytical skills and ability, your project management skills.  

Frankly, your people skills, you just mentioned there, you had to pull together a lot of different departments. You had to communicate with folks all over the organization. People that weren't used to thinking about leases from an accounting standpoint. You had to do all that under pressure with a deadline, right? Like almost every situation like that where it's a trial by fire or it could seem like a nightmare up front. When you get on the other side of it, it feels really satisfying. Like a victory. 

Khalil Bouban: Yes, for sure. It's very rewarding. Part of the journey was also I joined FEI to be able to kind of talk to my peers and do roundtables with other companies and we did work in sessions to talk about what each company was going through. Like I said, it was brand new for everybody. 

Everybody had to figure things out. There were some issues where we didn't agree with what the ASC was giving initially. We even signed a letter from all these companies, and we forwarded it to ASC and they gave some concessions about certain things.  

It was just the reward of going through that experience and gaining all this knowledge and information. 

Also, getting appreciation because I was known at some point, they took my first name and added the word lease to it. And because Game of Thrones was going on, they started calling me Khaleesi. I even got that and wow. The CFO acknowledged it in a letter to an email to myself and the team for us getting a company like Home Depot through that. It was very rewarding.  

Matt Waters: Wow. That's incredible recognition from the CFO of literally a - I don't know exactly - around a hundred-billion-dollar company, right? 

That's a big deal. Congratulations on that.  

I wanted to pull out a couple of things you just said there. You mentioned you work through FEI to influence the guidance that was coming out from the SEC, just in case somebody's listening, we use tons of acronyms in the accounting profession but FEI, that's a professional organization. It’s called Financial Executives International, and FEI among other things has CPE events, training courses, they host conferences, they host roundtables and they act as an industry group to accumulate feedback to send to government agencies, the securities and exchange commission that Khalil just mentioned, that's the SEC, and also, I'd say pseudo government agencies like the FASB, the Financial Accounting Standards Board. 

We won't get into the old codification of accounting standards and the whole process here, but in many ways, the rules that the SEC puts out, the Securities and Exchange Commission, the accounting standards that the FASB, for public companies, act like laws. 

If you don't comply with these guidelines and regulations, you risk your company going bankrupt. Being taken off the stock exchange. You risk to some extent, personal liability. If there's fraud involved in that kind of thing. This is a big deal and getting to influence that process through an important organization like FEI that is also a big deal.  

I would love to hear about how did that shape up? How are those meetings? What did you do in the round tables and crafting those memos that you just mentioned?  

Khalil Bouban: We were looking at different types of lease inception and if you should take the discount rate at lease inception versus the current discount rate and adoption and those kinds of things. 

At the time, there was some verbiage in the standard that was unclear. Some companies - we had Disney on there, we had Walmart on there. Obviously big companies weren't talking about mom and pop operations. 

A lot of them like Walmart had an international presence and different leases that are so old and those kinds of things. The same thing with Home Depot.  

Home Depot doesn't sign leases for a year or two. They're usually five, 10, 20, 25, 99 year leases. All of those things are going to be something that is going to affect us and those other companies. 

We talked about it back and forth, and how difficult it was going to be to comply with that. We all came to the conclusion that we need to address this with the SEC and we involve some of the big four firms like Deloitte and KPMG on these calls. Finally, we drafted a letter technically to the SEC and on the bottom, it was signed by all our CFOs. 

We submitted to the SEC, they then met with us on a call and we kind of voiced our opinion about what's going on and what our proposals were and they said, okay, we'll get back to you. I would say within about a month, they came back and said, we are going to give you an official letter from the SEC that you can use with your auditors. 

We're not going to change the verbiage of the standard, but you can. Change it to adapt to what you want to do as a policy. Here's a letter from the ASC saying it's okay to do so. When we did that, we actually shared the letter on the FEI site for other companies to use as well. Basically, we were the driving force into one of the technical accounting issues. 

CoStar + FEI = a great webinar

Register now for our next event

CoStar + FEI = a great webinar

Matt Waters: That's just incredible because you use the knowledge and experience that you had gathered right at Home Depot. You combine that with some of the other biggest companies in the whole world. Ultimately you influenced what's considered appropriate from an accounting standard and financial reporting perspective at the highest level in the United States. 

Again, I go back to some of the comments we made earlier. The stereotype is that accounting is boring and you're sitting typing on a keyboard or maybe even have a green shade over your eyes and taking down journal entries with a pencil is this kind of the ultimate stereotype. But you just mentioned these major meetings involving executives at the biggest companies in the world and basically influencing government type decisions. 

I know we could get into the nuances of what's actual law and what's an accounting standard. But, it is a big deal to be influencing the FASB and the SEC. You got to do that all because you had developed this passion and career and accounting. I think that's incredible. 

I also think just perhaps to be encouraging to some others that are listening, you might be thinking, well, Khalil had that opportunity because lease accounting came along. What are the chances of lease accounting ever changing to that extent again? I'm not going to be able to work on something that interesting and I would say I disagree with that if that's what you're thinking because things change all the time. 

In fact, another guest on the podcast this season was Kelly Anerud. Kelly is with RGP, and she worked on the lease accounting transition on behalf of RGP's clients. Now, she's heavily focused on sustainability and the ESG discussion that is ongoing.  

I won't get into all of that. I just encourage you, if you are looking for a challenge like Khalil mentioned, if you're hungry for that adventure, that challenge, take a look at what's going on in ESG right now, or sustainability. Think about how you could potentially help out with the company that you're working for now, or perhaps a different company or different clients. 

A lot of people are really looking to address ESG now, and it has a very similar feeling to the early days of the lease accounting transition. Kelly and I talked about that in the other podcast, so again, I won't belabor the point here, but I think that is a huge opportunity right now. 

Listen to Kelly and Matt's discussion here!

The Lease Alert podcast episode three

Listen to Kelly and Matt's discussion here!

Khalil Bouban: Revenue recognition was also happening at the same time as lease accounting. The project and the opportunities are always there. You just have to get rid of your fear of the typewriter like I did. Follow your passion.  

One thing Michael Jordan said that I always found interesting is, “if you love what you do, you'll never work a day in your life.”  

If it's something you enjoy, you don't think of it as frustrating or anything like that. You just take the challenge, and you strive right through it. Like Matt said, opportunities will always be there. Something else is coming down. 

Matt Waters: That leads me to my next question. Khalil now works at CoStar Real Estate Manager. He helps our customers. We have hundreds and hundreds of customers. We help with the automation of lease accounting and lease administration for both equipment and real estate. 

Khalil is a very important part of that process. He actually leads the Center of Excellence for lease accounting at CoStar Real Estate Manager. That's just a brief overview of your job. Now, Khalil, I would love to hear your thoughts on both now and then looking forward into the future. 

What are you passionate about working on? We have established you're passionate about accounting and have achieved success in this area. But what do you look forward to now? What gets you up in the morning and. It keeps you coming back for more? 

Khalil Bouban: I always thought I would be doing debits and credits and month end entries and those kinds of things. But once I went through that lease accounting project, I enjoyed it so much that I said, you know what? Matt approached me saying, hey, there's an opportunity at CoStar if you really like this.  

Because even though Matt left, he still stopped by Home Depot because they have a great cafeteria, and we would meet there, and we'd chat. It was more to see the people, less about the food I would say, for sure. He was well known at that point. Everybody would come, hey, Matt is here. We all would meet.  

But the point is that now I'm able to do this project on a grander scale because every one of our clients is, at the time when they were adopting the standard, maybe the private companies or failed implementations that are coming to CoStar, they're all going through the same steps that I went through. 

I can share my experience with them and what I learned from it and try to help them navigate and get to where we got as smooth as possible with the caveat that.  

Speaking of acronyms, I always say that whenever I tell them something, I say CYA, but in that context, it stands consult your auditors not the other CYAs, but because we don't give accounting advice necessarily, but we do tell clients what other clients would do or what we think they could try. 

Obviously, they need to be clearing it with their auditors and their management but the whole idea was to get other people to the promised land as easily as possible. That's really something that I take pride in and then like to help other folks that way.  

For my future, I think at some point, whether at retirement or when I'm not doing this anymore, I probably would like to go to the classroom and be a an accounting teacher or professor or whatever you want to call it and teach the new generation, hopefully to ignite a passion and other folks to do this and go into accounting. 

That's probably where my future will be maybe 10, 15 years, something like that.  

Matt Waters: I love it.  

In case anybody forgets, what does CYA stand for?  

Khalil Bouban: Consult your auditors.  

Matt Waters: Khalil, thank you so much for being here today. As always, I really enjoy talking with you. And folks, that's Khalil Buban. 

He works at CoStar Real Estate Manager. He's a lease accounting superhero. Reach out to him. I'll put his information in the show notes. Thank you for listening to The Lease Alert. I'd be grateful if you would like and subscribe wherever you listen. Until next time, keep learning and leasing.