Ensuring the quality of lease data and eliminating any gaps is fundamental to lease accounting compliance. Easy accessibility to key lease data points is also fundamental for day-to-day business operations. As organizations gather and centralize lease data for ASC 842 and IFRS 16 compliance, and the lease abstraction process should be evaluated and vetted as part of the planning phase.
What is lease abstraction?
A critical part of the lease data management process, lease abstracts provide a succinct summation of lease agreements in a format that is easy to understood and key data points can be easily identified and referenced. A good lease abstraction process provides a summation of key financial, business and legal information including any lease provisions unique to that lease, financial obligations or other issues
Who does lease abstraction?
Lease documents can be extremely lengthy and complex, and the task of lease abstraction should not be assigned to a layperson. Lease abstraction can be performed by specializes software, subject-matter experts or a combination of technology and human resources. While software can expedite a large volume of leases, expertise is valuable when identifying nuance in complex leases.
The expertise required for quality lease abstraction includes an in-house team of attorneys, paralegals and lease administration professionals who can help companies achieve confidence in the quality and accuracy of critical lease data by providing management solutions for key financial and legal information.
Benefits of lease abstraction
In the original form, lease agreements are dense documents full of legal language. There is no universal, standardized structure for a lease agreement and it’s difficult to find relevant information at a glance. Lease abstracts are particularly useful for administrators, leasing agents, maintenance managers and property managers who need to access critical information during day-to-day operations. Learn more about CoStar’s lease data services and lease accounting software.