The quality of data, the complexity of compliance and a lack of confidence in IT systems are the main concerns for companies ahead of the finalizing of a new lease accounting standard, with almost 80% of executives believing that compliance with the new standard will be difficult, according to a new Deloitte survey on the proposed standard.

The findings also revealed companies generally remain no more prepared to comply with the new standard than they were two years ago. In the case of real estate lessees, confidence in their preparations for the new standard has actually fallen, with only one percent “extremely” or “very” prepared to comply in 2013, down from nine percent in 2011.

The finalized lease accounting standard could be issued in 2014 with an expected effective date no sooner than 2017. The standard will require companies to recognize on their balance sheets the assets and liabilities resulting from all leases of more than 12 months in duration, based on the present value of the lease payments.

The survey indicates that many executives anticipate the new standard to have significant financial reporting effects – 58% expect a significant impact on their balance sheet and 53% on disclosures. Nearly half of executives also cited an effect on financial ratios, with significant effects on debt to equity (71%) and return on assets (52%) cited by these respondents. Again, the impact on lessees appears to be more severe than on lessors, with the former group far more likely to cite these impacts.

“It’s clear that lessees are increasingly forecasting difficulties complying with the new standard, though the concerns for lessors look to be easing,” explained Scott Hileman, director, Deloitte Transactions and Business Analytics. “The lack of progress and, in some cases, regression on compliance since 2011 is partly a result of the uncertainty regarding the new standard. However, given the standard’s complexity, the financial impact and the significant data challenges posed, companies should start getting their houses in order.”

To download full survey results click here.