STRATEGY POLICY INVENTORY DATA
SYSTEM PROCESS
CONTROL SUSTAIN
24
tangoanalytics.com
ROAD TO LEASE COMPLIANCE
|
PROCESS
line approach while IFRS 16 accounts for much of the expense upfront, thus
their respective expense patterns behave differently. Additionally, right-of-use
(ROU) asset balances will vary based on region reported. The table that follows,
from Cushman & Wakefield, summarizes key FASB/IASB differences.
Key Differences Between
FASB (U.S. GAAP) & IASB (All IFRS-Based Countries)
SOURCE: The New Rules for Real Estate Leases-New Rules Topic #2, Cushman & Wakefield
Based on the differences outlined above, multinationals will need to revisit and
adjust current lease accounting processes to adhere to these new regulations.
These complexities will also introduce compliance risk requiring companies to
institute controls and measures to ensure data accuracy.
Lease Identification and Classification Process
The definition of a lease has changed with the new regulations and one of
the biggest challenges facing companies is the assessment of all contracts to
determine if they should be classified as leases under the new rules – whether
that be a real estate lease, equipment lease or an embedded lease. For most
organizations, real estate leases are more material, likely to be centrally
managed in a software system and are fewer in number. Equipment leases, on
the other hand, are greater in number, typically lack a centralized database
PROCESS
