Excel has been the program of choice for many accountants, as the versatile spreadsheets are readily available and relatively easy to configure for most projects. However, while Excel has been a trusted resource for many accounting projects, it is not the reliable solution for lease accounting compliance with ASC 842 and IFRS 16. The complexities associated with centralizing all real estate and equipment lease data and moving virtually all leases to the balance sheet are too great, and the risks associated with critical dates and workflow management too high to rely on Excel.
Here are a few key features offered by lease accounting software (and not Excel) that can result in significant expenses:
Critical date alerts
Automated email and on-screen alert of critical dates, essential to prevent overpayment or evergreen autorenewal options that can result in payments far larger than the equipment is worth.
Quality control measures, such as work flow
Unlike Excel, lease approval workflow software provides journal entry approval workflow and accounting schedule approval workflow by creating an audit trail of change history including the who, what and when of all stages of the approval process. It also allows accounting teams to control lease data changes.
Support complex reporting needs
The right lease accounting software offers comprehensive reporting capabilities, including standard accounting report, advanced financial reports and ad hoc reports. This includes easy and accurate ways to run reports for ASC 842 and IFRS 16 disclosures with lease level details for auditors; accounting forecasts and lease amortization by lease. Advanced financial reporting capabilities should include annual obligation by account, annual allocations by lease, monthly charges by account, a lease options report and more.
Lease classification testing
ASC 842 requires the classification of leases. Lease accounting software can help perform finance versus operating classification testing to ensure classifications are accurate for compliance.
Other compliance, such as Sarbanes Oxley
Without accountability through workflow and other safeguards, Excel is inherently not compliant with Sarbanes Oxley requirements. A smart lease accounting software solution offers benefits beyond simple calculations, and makes compliance easier for Sarbanes Oxley, ASC 842, IFRS 16 and other compliance standards. Learn more about CoStar’s proven lease accounting software solution that offers comprehensive features and functions to help with everyday lease data management, broader compliance initiatives and helps your streamline business in a way that can positively impact the bottom line.