The Automated Solution to ASC 842 Compliance
by Laura Richards on November 8, 2022
So, you thought your lease management program was automated.
But what you got instead was an accounting process that requires constant back and forth between an old-school spreadsheet and sluggish software. Or you constantly lose the audit trail because your data and policies need to be re-entered for every remeasurement.
There’s a better way.
Here are 10 benefits of a truly automated lease accounting solution:1. Less effort burned
It’s no secret that burnout is increasingly prevalent across all sectors. Don’t let it affect your team by forcing them to use old-school practices. Automation distributes workloads more evenly across accounting periods allowing your employees to do their jobs efficiently.2. Less time spent
Manual lease accounting takes hundreds of hours. Especially for enterprise organizations. Manual workarounds and calculations are grueling and time-consuming. Most importantly, they’re not necessary.
All solutions supply documentation, and most have it online. However, real productivity comes from multiple, easy methods for in-application help at the command level.3. Fewer human errors
With tedious, sluggish manual accounting comes unavoidable human error. If your spreadsheet has thousands upon thousands of cells, a mistyped figure is inevitable.
When it comes to lease accounting, the numbers need to be precise. With an automated solution, you’ll have a backup when it comes to accuracy. You’ll even get alerts when something seems amiss.4. Easier reporting
Your organization doesn’t need cookie-cutter reports. Unique businesses require unique reporting. Things outside of the standard lease agreement fields. Smart lease accounting software will allow you to create customized data fields alongside standard lease data for ease of access. Ad hoc reporting on these and other fields is easy with reporting tools.5. Improved audit preparation
When it comes to auditing, there’s a smorgasbord of reports needed to satisfy the requirements. Lease accounting disclosure, roll-forward, reconciliation, and ad hoc reports can all be needed for an audit. Each of these includes vital lease-level details that auditors need to confirm accuracy.6. Compatibility with lease administration
The new lease accounting requirements have led to an overlap in data been real estate accounting and lease accounting. Rent amounts, payment timing and term dates are needed for both lease administration and lease accounting.
An automated solution can prevent duplicate data entry, avoid unnecessary system integrations, and does not compromise real estate needs.7. Compatibility with market data and analytics
To obtain the support for fair market value (FMV) of properties, companies typically go through a time-consuming process. Accounting requests the FMV from the real estate department, which requests it from a real estate broker, who then uses researched data to derive the FMV and sends it to the real estate department, which sends it back to accounting.
When you have your own automated solution at the touch of your fingertips, that back and forth can disappear, and the relevant teams can access the relevant information.8. Built-in compliance checks
ASC 842 has changed the way lease accountants operate. With years of experience, it could still be challenging to adapt to this new way of working.
An automated solution continuously searches for errors based on ASC 842 and supply instant error messages during data entry.
There is also the option of running exception reports periodically. These reports will list earlier warnings, the actions that were taken and the username of the person who took the action.9. Automated scheduling
An automated solution will allow accountants to easily split amortization schedules as opposed to manually separating lease details into spreadsheets.
Each instance requires hours of work and introduces added risk due to saving schedules outside of the lease accounting solution.10. More people who have your back
The right automated solution will be backed by the right people. You’re not just purchasing software. You’re also getting well-versed customer service experts, in-app help options, access to videos and articles that share best practices and how-to's, and consistent updates to keep your business running smoothly.
If anything on this list would make your day-to-day, monthly, quarterly or annual workload easier, it’s time to switch to an automated lease accounting solution.
If you’d like firsthand information on how a CoStar solution would work for your organization, reach out today.
You May Also Like
These Related Stories