What will 2022 hold for the accounting profession? What does the future of lease accounting look like? These are all big questions.
In the latest Trullion Report on what we can expect in 2022, we look at some of these big picture issues in more depth, making it a must-read for anyone in or connected to the accounting profession.
ASC 842 is here (finally)
One of the major events of 2021 was discussion around the new lease accounting standard, ASC 842, becoming mandatory for private companies – after public companies had already been made to comply with the standard.
There were many delays before ASC 842 actually became binding, and even once this had occurred, there were further changes made as a result of the impact of COVID-19, especially when it came to concessions received by lessees and the related lease modification requirements in ASC 842.
What makes this release so important for 2022, is that not only will this be the first year that ASC 842 is mandatory for private companies, but the knock-on effects of the implementation of the standard are expected to be significant.
Who’s affected?
This affects multiple stakeholders. For example: auditors are going to naturally focus on clients’ compliance with ASC 842. Given that it is a new standard, this obviously increases the risk around this critical area.
Accounting teams are therefore going to have to invest significant resources in ensuring that their lease accounting is fully compliant with the new requirements – from calculations like the present value of future lease payments using the stipulated discount rate, to ensuring that disclosure is treated correctly.
What’s more, due to the significant changes that ASC 842 introduced over the past lease accounting Topic ASC 840, teams will have to go through all contracts to test if they meet the new lease definition requirements.
Other stakeholders are affected too. Investors, for example, are likely to see some significant changes to certain financial ratios. In the 2022 Report, we dive down into which industries are most affected.
Challenges and opportunities
2022 will bring tremendous challenges and opportunities when it comes to lease accounting.
One of these challenges will be the amount of time needed by accounting teams to comply with ASC 842, especially if you’re not using a technology tool to assist you.
Conversely, opportunities abound, thanks to the changes of ASC 842: from inter-departmental synergies, to gaining strategic visibility. We look at more of these opportunities in further detail in the Report.
The future of accounting
It’s no secret that the future of accounting is going to be technology-driven. From artificial intelligence (AI) to machine learning and automation, there are some exciting innovations out there, some of which are being used right now by leading companies.
One of these is dedicated lease accounting software, which according to Deloitte, is already being used by 74% of companies surveyed.
At Trullion, we’re proud to be leading those efforts: offering an AI-driven automated lease accounting software solution that empowers companies to seamlessly meet compliance requirements, produce accurate and consolidated reports in minutes, significantly reduce costs, see immediate ROI, trace the audit trail back to the source data, access simple reports and clear financial schedules, generate fully compliant disclosures and share a live 360° data image of the transactional workflow with key stakeholders.
With Trullion, you get all this and a whole lot more. And to read more about the exciting future of accounting, and what 2022 holds for lease accounting, check out the 2022 Report: The Future of ASC 842 Is AI-Powered.
