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Road to Compliance: Guide to Comply with FASB ASC 842

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STRATEGY POLICY INVENTORY DATA SYSTEM PROCESS CONTROL SUSTAIN 30 tangoanalytics.com ROAD TO LEASE COMPLIANCE | CONTROL In light of the new lease accounting standards, leases play a more significant role in your financial disclosure, which means there is increased risk around the accounting of those leases. You now need to take a holistic view of the full lifecycle for all your leases and refine the controls and other processes related to identifying, calculating and accounting for them. Numerous aspects of the new standards are causing concern among corporate executives, but it's safe to say the control issue is top of the list for many. In a KPMG survey in November 2017, 500 finance executives were asked what was keeping them up at night, and internal controls over financial reporting topped the list at 30 percent, compared to 21 percent in 2016. And the impending changes to the new lease accounting standards are one of the underlying causes of that increase. What are the key areas of control consideration under the new standard? Internal Control An internal control – as defined by accountants and auditors – is a process to ensure the achievement of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. Internal control involves everything that controls risks to an organization. Lease Negotiation & Accounting Historically your company may have been negotiating leases and accounting for them on a decentralized basis, but it may be worth reviewing. While it made sense for you to control and monitor operating leases at the business unit or functional level when they were classified and treated as an expense along the lines of service agreements, now that these leases are moving onto the balance sheet, centralizing these functions may ensure better controls. CONTROL

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