The new GASB 87 lease accounting standard is official, and the time for governmental entities to create a compliance plan is here.
For most organizations, establishing right-to-use assets and lease liabilities for real estate and equipment leases will be a sizable task. CoStar’s lease accounting software can help ease GASB 87 compliance projects with the most proven solution for the complex calculations, financial reporting and system integrations.
Previously, governmental entities reported their leases similarly to private entities under FASB ASC 840. But GASB 87 requires that all operating leases now be accounted for as finance leases. Leases previously classified as operating leases will not only be capitalized on the balance sheet, but also be reported differently on the income and cash flow statements.
CoStar also recommends these 12 Steps for GASB 87 Lease Accounting Compliance:
- Obtain a full understanding of GASB 87
- Set a compliance timeline
- Meet with a cross-functional group of leasing stakeholders
- Organize a project team
- Select a software solution for lease management and reporting
- Compile a list of all leases
- Evaluate compliance with existing accounting standards
- Evaluate the HR impact and adjust staffing/training plans
- Set internal accounting policies around leasing
- Evaluate the process flow for leases and adjust to ensure efficiency
- Review new processes, software, policies and pro-forma results with auditors
- Set up a sustainable process for managing leasing data
See why experts recommend CoStar to manage and report on real estate, equipment and other leased assets for compliance with the new GASB 87 standard on our lease accounting software overview page.