ROI Opportunities from Adopting Lease Accounting Standards Still Prevalent
MAR 19, 2021 - 6:26 am
According to LeaseAccelerator and EY’s 2021 Global Lease Accounting Survey, while lease accounting standards for public companies have been around since 2019, there is still a significant opportunity to drive ROI from the investments that were made in adopting the standards. Public and private organizations that drive toward integration and the automation of their core lease accounting processes can see dramatic improvements in efficiency.
The survey exposed several challenges:
More than half of respondents (51%) said they have more than 250 leases but still don’t have lease accounting integrated with their ERP systems, requiring manual work.
35% of respondents are still using spreadsheets to manage lease accounting.
More than half of respondents (58%) said they don’t have a centralized lease vs. buy process.
42% of respondents said that they terminate fewer than 70% of their leases on time and overpay.
These gaps drive audit risk and accounting costs, suppressing the ROI expected from leasing and compliance investments. The report includes guidelines for organizations at all stages of adoption of ASC 842, IFRS 16 and GASB 87, with recommendations to make lease accounting more efficient.
“In this survey, lease accountants identified key unresolved accounting challenges and explained practical ways to improve their lease management this year,” Michael Keeler, CEO at LeaseAccelerator, said. “It’s clear that organizations in all phases of adoption can be more efficient and integrated to reduce their overall risk and cost and drive a higher ROI.”
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