In a recent survey by KPMG, nearly half of all companies surveyed have not begun to assess the impacts of the new FASB lease accounting standard, which has an effective date of January 1, 2019.

“Although the adoption deadline is a few years away, companies should not delay their assessment. To effectively comply with the leasing standard’s requirements, companies will need to properly identify existing gaps and prepare to report several years of data, which takes extensive planning,” according to Dean Bell, KPMG’s Advisory lead for Leasing.

Few companies have conducted an inventory of their leases or even formed a project team to help implement the new leasing rules, according to the survey. Respondents indicated they are most challenged by implementing the IT systems needed to move leases onto balance sheets.

Adds Bell, “Leasing is not core to most businesses, so companies may not have an existing lease inventory system to capture the key data required under the new standard.  Identifying, analyzing and disclosing the effects of recording leases on the balance sheet are a series of exercises that alone will take significant time, in addition to the lead time required to install a new system. Many companies should consider employing an inventory system as soon as possible and assembling a cross-functional team of personnel to understand broader organizational impacts.”