Both public and private companies are underestimating the challenges of transitioning to the new lease accounting standard, according to a new survey.
The survey, by lease accounting technology company LeaseQuery, found that only 37 percent of companies in the early stages of implementation anticipate that their transition would be difficult. However, 67 percent of companies in the latter stages of implementation reported actual difficulty.
The Financial Accounting Standards Board recently voted to propose delaying the leases standard, along with several others, including the credit losses, hedging and long-duration insurance standards (see FASB to propose delays in major accounting standards). The leases standard has already taken effect for public companies since this past January, and it was scheduled to take effect for private companies next January. The FASB proposal would defer the effective date of the leases standard until January 2021, giving businesses an extra year to implement it.
The LeaseQuery survey found that over half of public companies (54 percent) have already completed their transition to the new standard, seven months after the deadline. But only 5 percent of private companies have completed the transition, with 58 percent of the companies polled saying they’re still in the early stages of assessing their implementation plans. LeaseQuery engaged Encoursa to conduct the survey, polling 200 accountants.
“While organizations await the FASB decision, one thing is clear: a delay is just a false sense of security,” said LeaseQuery CEO George Azih in a statement. “Transitioning to the new standard is a complex, time-consuming process, even when you have the best team and tools on your side. Private companies, nonprofits and government organizations should continue to move transition plans forward, and with haste.”