LeaseCrunch calls on the FASB to not make major changes to lease standard, but identifies two smaller process improvements

MILWAUKEE, Dec. 30, 2020 /PRNewswire-PRWeb/ — LeaseCrunch, the only lease accounting software made by former CPA firm auditors for CPA firm auditors, today asked that the FASB not make large changes to the lease standard but identified two smaller process improvements.

“Public companies understand the new lease standard now that they have completed their implementations,” said LeaseCrunch CEO Ane Ohm. “For the most part, the guidance works as intended and is a more transparent way for organizations to account for their leases. Financial statement users are also gaining comfort in how they understand the impact of the new lease standard on an organization’s financial health.”

LeaseCrunch believes that big updates could make future lease implementations more confusing, particularly for the 25 million private U.S. companies that will need to comply for their fiscal years that start after December 15, 2021.

“Listening in on the FASB’s September roundtable session, it was quickly apparent that the participants did not want sweeping changes,” continued Ohm. “Instead, they are seeking additional flexibility and expanded practical expedients to simplify the accounting and auditing of calculations, while achieving the intent of the new lease standard. That said, there is room for small tweaks in the standard.”

LeaseCrunch process improvements
1. Increase decision-making options
Leases within an asset class tend to have many similarities, including materiality, financing options, and terms. Implementing the new lease standard could be easier if more decisions, like methods for determining the discount rate, were decided by asset class. Real estate leases have a much greater impact on the financials than photocopiers, and the effort required for decision-making ought to be similarly aligned.

LeaseCrunch believes that private companies would welcome a practical expedient to reduce the cost and complexity associated with determining the incremental borrowing rate. The Private Company Decision-Making Framework was developed to assist the FASB and the Private Company Council in evaluating potential accounting alternatives such as this.

2. Improve clarity around materiality
The new lease standard seemingly assumes that organizations would apply their typical materiality rules, but it’s not clear in the current guidance. As noted in the example above, applying materiality could simplify decision-making for important inputs like which discount rate to use for each leased asset. Materiality considerations might also affect which operating leases need to be added to the balance sheet. The industry is looking for more guidance on materiality standards.

About LeaseCrunch
Named by Accounting Today as one of the top new products, LeaseCrunch provides the easiest cloud-based lease accounting software for CPA firms, designed to help organizations implement the new lease accounting standards, ASC 842, GASB 87, GASB 96, and IFRS 16.

A simple but powerful tool, LeaseCrunch significantly reduces the time needed to transition, account for, and maintain leases. Designed by CPAs, former Big 4 public accounting auditors, software development veterans and a former member of the FASB staff, the application offers an easy-to-use customer interface that delivers “audit in a box” lease accounting services, reducing the time it takes clients to prepare for an audit. LeaseCrunch allows companies to identify policy elections for the leasing standard through templates for both US GAAP and IFRS. For more information go to: http://www.LeaseCrunch.com

Media Contact

john vita, John Steven Vita Communications, +1 (847) 853-8283, john.vita@jsvcom.com

 

SOURCE LeaseCrunch

LeaseCrunch calls on the FASB to not make major changes to lease standard, but identifies two smaller process improvements WeeklyReviewer

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LeaseCrunch calls on the FASB to not make major changes to lease standard, but identifies two smaller process improvements WeeklyReviewer
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LeaseCrunch calls on the FASB to not make major changes to lease standard, but identifies two smaller process improvements WeeklyReviewerLeaseCrunch calls on the FASB to not make major changes to lease standard, but identifies two smaller process improvements WeeklyReviewer

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