Paving a path to success: preparing for new lease accounting standards

New accounting standards aimed at improving the transparency of the reporting of leased assets and liabilities on financial statements could have a significant impact on many companies’ financial operations — from implementing new accounting policies and processes to deploying new IT systems. Most companies are aware of the new guidance issued only a few short months ago by the Financial Accounting Standards Board (FASB) and the

International Accounting Standards Board (IASB). This is not surprising given the decade-long effort to revise the accounting for leases. Furthermore, more than half of those responding to our survey have begun to take actions toward adopting the new standards, which gives us insight into the journey ahead.

That was one of the key findings from our recent survey to assess the readiness of more than 125 companies with respect to the new guidance. Conducted by EY and FERF in March and April 2016, the survey sought to gain a better understanding of how and when companies plan to address the challenges of preparing for the new standards.

While many are still determining what steps they will need to take to comply, more than half have already taken actions, ranging from forming a project team to completing a readiness assessment to meet the new standards. Yet 83% of respondents have not budgeted for the associated costs.