Transitioning to the new lease accounting standards will be complicated for the public sector – even with the original 18-month extension. Make compliance possible with the right resources.
New lease accounting standards will dramatically affect the way governmental entities record leases on their financial statements. The Governmental Accounting Standards Board Statement Number 87 (GASB 87) is effective for reporting periods beginning after Dec. 15, 2019, with a compliance deadline of July 1, 2021.
Complying with these complex changes puts pressure on public sector organizations and the people who run them. At the same time, the COVID-19 pandemic and economic uncertainty have made it difficult for organizations to make long-term plans. With these complications in mind, government entities should already be taking steps to meet GASB 87 standards. The deadline will arrive before we know it.
To help public sector organizations become and remain GASB 87-compliant, the consulting team at Crowe has the solution. The Crowe Lease Accounting Optimizer eases the transition to the new GASB 87 standards while also targeting inefficiencies and reducing risk.
“Don’t just kick the can down the road. The new rules are here, and all public sector organizations need to be compliant,” said Tom Reznicek, consulting principal at Crowe. “With the Crowe Lease Accounting Optimizer, organizations can get their entire lease catalog into ongoing conformity, thus reducing risk and bringing operational efficiencies along the way.”
The Crowe Lease Accounting Optimizer reduces workloads through automation. Automated lease accounting processes provide a huge benefit to any organization relying on manual entry to keep track of their finances. Tracking thousands of different leases using spreadsheets requires a lot of human resources and bandwidth – both of which can be in short supply at public sector organizations. To be compliant and prepared for audits, automating as many manual operations as possible is critical and incredibly time-saving.
“From an audit perspective, the big concern is the risk that comes with not properly recording these leases,” Reznicek remarked. “It’s a complicated process that requires a lot of calculations, which means that the risks of error and formula-tampering are very real.”
Software benefits such as minimal data entry, automated processes, and automated record-keeping are key to reducing errors and being audit ready. This solution also includes one-click lessee and lessor leases, visibility and forecasting, comprehensive lease management, and flexible integration.
The Crowe Lease Accounting Optimizer is fast, affordable, and easy to implement – all essential qualities to facilitate meeting the July 1, 2021, compliance deadline. Four key benefits for the public sector include:
- Automated lease accounting processes. These processes can help reduce dependence on error-prone manual data entry by automating the classification of leases (finance or operating, equipment or real estate); lease receivables and payments, including lease payment schedules; journal entries; depreciation of assets, including creation of liability amortization tables; and asset management.
- Out-of-the-box reporting and analytics. Organizations can use the reporting and analytics to measure the effects of the new accounting standards on KPIs with an onboard calculator; access and monitor the status of all leases across an entire organization; make accurate projections with real-time updates on lease payment and leased asset information, present value, and cash flow; and generate reports.
- A comprehensive set of tools. These tools can ease the transition to new standards, allowing you to quickly import existing leases and leased assets; automatically classify leases based on GASB 87 and ASC 842 criteria; add, edit, monitor, and securely access lease and leased asset information throughout the organization; utilize easy currency conversion and multiple language support; and import and export to spreadsheet software.
- Data security. Because this software is built in the NetSuite cloud, public sector organizations can rely on an enterprise-grade infrastructure, comprehensive data privacy, data management, and security and application availability.
In addition to the Crowe Lease Accounting Optimizer, we also offer GASB technical consulting and implementation services to help organizations meet their short- and long-term goals. Having served the needs of public sector organizations for more than 50 years, the Crowe team brings diverse, in-depth experience that enables insight and a clear understanding of the challenges and solutions of public sector agencies. Furthermore, we have a proven implementation methodology along with the GASB technical expertise that’s critical to help organizations identify their lease population, determine their abstract key terms, and build a future process for upcoming leases.
When implementing the Crowe Lease Accounting Optimizer into an organization’s processes, Crowe consultants can do the following:
- Engage with the organization and set expectations and a framework for a successful implementation
- Drive the organization through configuration requirements and system setup
- Provide end-user training and support the organization through user acceptance testing
- Convert final data migration and perform final cutover activities
“Do not underestimate the resources needed to comply with GASB 87,” Reznicek warned. “Crowe has the qualified resources and the solution available to help automate work so that your people can focus on what’s important.”
This article was originally published by Governing on Nov. 3, 2020.