Surveys Show Many Public Companies Unprepared for Implementation of New Lease Accounting Standard as Deadline Nears
In recent years, accounting and finance professionals have wrestled with the implementation of new GAAP standards in the areas of revenue recognition, leases and credit losses, as previously reported by The Ticker. Now that the January 1, 2018, deadline for most public companies to implement the new standard on revenue recognition has come and gone, attention has turned to the January 1, 2019, deadline for implementation of the new lease accounting standard, and two recent surveys show that many public companies are not where they need to be.
According to a survey conducted by the Deloitte Center for Controllership, just 21.2 percent of accounting, finance and other professionals say their companies are “extremely prepared” or “very prepared” to comply with the new leasing standard, while nearly as many respondents (18.2 percent) report being “not too prepared” or “not at all prepared.” In the press release announcing the survey results, a Deloitte representative predicts that many companies will “struggle to be ready by the effective date,” and warns against “underestimating the effort that will be necessary to collect lease data and aggregate it into a centralized system.”
A similar survey conducted by KPMG found that “only 15 percent of respondents have completed their implementation, 45 percent have their implementation in process, 19 percent are in the planning phase of their implementation, and 16 percent are still assessing the impact of the changes. A final 5 percent haven’t started their transition efforts.”