STRATEGY POLICY INVENTORY DATA
SYSTEM PROCESS
CONTROL SUSTAIN
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ROAD TO LEASE COMPLIANCE
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PROCESS
At the heart of Tango's Road to Lease Accounting Compliance is the need to
rearchitect the people, processes and technology used to manage leases to
achieve initial compliance and operationalize ongoing compliance.
A new lease follows a certain lifecycle, a long and twisted path from inception
to termination which varies greatly based on decisions made along the way by
both the lessee and the lessor. The path by which leases travel are processes
– negotiation, execution, payment, renewal, amendment, adjustments, and
on and on. Leases have a path, or web of processes, that you follow today to
administer and account for leases. Well, the bulldozers are here in the form of
new regulations which will cause all organizations to lay a new path for leases.
This new path, or set of lease processes, will travel into new departments,
potentially to third-party providers outside the four walls and back. It will take
right and left turns into uncharted territory. The key here is to chart the path
ahead of time, so you won't get lost or hit a lease accounting dead end.
The number of process changes are too numerous to list here. Instead,
we've focused on the high impact ones you will want to dedicate extra time
understanding and designing.
Lease Governance Process
FASB and IASB originally focused on a "convergence project", but when the
dust settled, material differences emerged which have led to complications for
global companies ('Day One' accounting is similar but 'Day Two' diverges). If
you're a global corporation with leases in multiple countries some of your leases
will be governed by IFRS and others by FASB.
The main difference relates to the fact that IFRS uses a single lease accounting
model as all leases are categorized as financing arrangements from an income
statement perspective, while FASB still utilizes a duel-model classifying leases
as operating or finance. These differences impact expense patterns and asset
balances under the two systems. On the expense side, FASB utilizes a straight-
PROCESS
