Automated Audit Compliance for Leases – The Best Way to Be Ready

Companies will need to comply in every way with accounting and tax regulations to avoid penalties. This includes lease accounting. A part of this is understanding the accounting standards that need to be always complied with when it comes to how leases are recorded in financial records. For instance, the balance sheet will now need to display certain types of information in a way that is clearer to an investor or anyone interpreting the accounts.

When it comes to leases, particular requirements are important to adhere to. This can be made easier, though, when computer software is brought into play. With this in mind, you can try a demo of LeaseAccelerator. This is a clever piece of software that will take care of recording leases in a way that complies with accounting standards.

To help us to understand how this automatic compliance of using the software can help, we will examine three of the most important accountancy standards in turn that we need to always comply with.

ASC 842

ASC 842 is a replacement accounting standard. It replaced ASC 840. This was to increase the level of disclosure and enhance the visibility in terms of the leasing obligations in respect of now both private and public businesses.

GASB 87

The GASB accountancy standard relates to how a lease is defined in a set of accounts. It defines one as a contract conveying control of a right to use the entity of another when it is a non-financial asset. This will be for a period that is specified and in exchange for payment.

Examples of non-financial assets include equipment, buildings, land, and vehicles that are used for business activities. If it is owned by another and used in exchange for payment, then it is leased. Studying the small print about any accounting standard will mean that you fully understand it. Thankfully, as well, computer software can guide you when it comes to recording assets correctly.

IFRS 16

We perhaps should not have left it to last because IFRS 16 is considered one of the most significant of the lease accounting changes that have been made over the last 30 years.

IFRS 16’s objective is to make sure that companies are reporting in a standard way the information that relates to all of the assets that they lease. This has the purpose of creating transparency for those looking at the financial statements of a business whose activities include leases, from whatever perspective. This means whether they are assets or liabilities to a company.

IFRS 16 will apply only to leases or lease components relating to a contract. The changes and introduction of the accounting standard will affect how figures are recorded on the balance sheet. The information must be input correctly onto a computer system, and it is the computer package that can effectively guide the inputter into this is one such as LeaseAccelerator.

An automated procedure will help with full compliance in respect of lease accounting when accounts are ready for audit on a timely basis. The figures input will all combine to form a correctly reported balance sheet.

Lease accounting software provides an effortless way to comply with the above and other accounting standards. It will mean enterprise and global compliance and handle real estate accountancy with ease. This is an element of leasing. Properties will be leased either way and then need to be kept track of so that rents are collected or budgeted for in a timely and accounts-friendly way. A way that is more visible to the outsider trying to interpret the set of accounts that includes leasing activities as a part of its figures.

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