Lease Accounting Tips: 3 Easy Ways to Ensure Compliance with GASB 87
When it comes to complying with GASB 87, we have no choice about whether to comply but there are easier ways that we can find to do it. In this article, we shall explore some of these to assist you when accounting for leases.
To first define it, GASB 87 is an accounting standard and statement of the Governmental Accounting Standards Board. It is the new lease accounting standard for any US public sector entity and states that a lessee must recognise their lease liability and the intangible right to use the leased asset. Also, a lessor must recognise deferred inflow in terms of resources and a lease receivable.
So, now we know what GASB 87 is about, let us explore ways to ensure compliance.
Plan Your Time
It is important to not run out of time to gather all the data you require for compliance. This can better be achieved by plotting yourself a timeline and then sticking to it. Plan your time wisely by thinking about any new technology in terms of software that you might need to record your leases and also about any new policies and processes that you need to implement. Staff training will be important so that every one of your staff is compliant. Every member of your accounting staff will impact overall governmental compliance.
Time can, of course, be saved by accurate recording throughout every stage of the accounting process. Lease accounting software makes the recording process quicker and the full picture at any one time easier to interpret. Achieving success with GASB 87 is about planning.
It is important to constantly review your lease processes to see that they are maintaining compliance. It is about making time to evaluate how you have been managing important documents and whether that has strictly been compliant with what is required. An audit you can almost guarantee will pick on the one discrepancy out of perhaps thousands of leases being dealt with. All the accountancy staff will need to be versed in the same accountancy standards and practices and know-how to effectively apply them. This will include knowing how to properly use the software that records them. Accuracy concerning inputting will also be required for no mistakes to occur that impact on following the correct standard.
Data should be reviewed, or validated, to ensure that there is no duplication, inconsistencies, or missing figures.
Extract and Centralise
Following the validation process, a team, whether outsourced or internal, will need to be versed in the overall process and know how to leverage management and lease accounting technology that has been implemented within your company.
Installing a new process in terms of lease accounting will need to be backed up by training and explaining to all those involved in the process. Having said that, a new process cannot go against compliance, just be one that works better for a certain company trying to manage the lease data that it has.
In conclusion, the processes and procedures you put in place must sustain a company’s compliance with GASB 87, along with all the other accounting standards. Start with assessing your ability to meet the requirements of GASB 87 and then go from there. Each standard will need to be checked against the leasing data and how it is being recorded. What you end up with and what is missing will be the clue to how near to the accounting standard you are. There is no reason why, with the right software and the right personnel, that you should have anything much to do when it comes to an audit. Automatic software can make the recording of leases easier, and coupled with the required accounting knowledge, ensure almost automatic compliance with standards is maintained.