The latest lease accounting standards, including ASC 842 and IFRS 16, deal extensively with lease modifications. ASC 842 defines a lease modification as “a change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease.”
In a nutshell, this is when a change has occurred to the lease, and the standards lay out how these should be dealt with, in extensive detail. For example, is there a new lease that should be recognized here, or should we continue with the original lease, with minor changes?
Lease modifications: a house of cards
Or perhaps, a more appropriate analogy would be a Jenga tower. One small change can have a huge knock-on effect. This effect is multiplied when there are a number of leases that are changed.
Take an organization that leases a fleet of vehicles. Should the pricing or the duration of the lease change, there is some serious number crunching (and referencing the relevant lease accounting standard) that need to be done to ensure compliance.
This is exacerbated if you’re still using Excel spreadsheets to manage your leases. Don’t get us wrong, Excel will be a big part of accounting for the foreseeable future – we love the tool and use it every day – but given the vast changes to lease accounting standards, and the number of leases within most companies, and taking care of leases using Excel exclusively becomes not only incredibly difficult, but also exposes you and your company to significantly increased risk.
The magic of the Unlimited Modifications Support feature
Trullion’s Unlimited Modifications Support feature solves this by using proven AI-powered automated lease accounting technology to seamlessly take care of lease modifications.
Endless modifications: you can perform any number of modifications within contracts, and the software jumps in with automatic detection and re-analysis of the contract and payments. Combined with Trullion’s unmatched OCR technology, you can simply upload an updated contract and the software will highlight the changes, create additional journal entries and take care of all the disclosure requirements subject to the latest lease accounting standard updates. Voilà!
Automated Bulk Upload: what’s more, you can “bulk” upload contracts, payment streams, payments, and currencies within seconds – including Excel spreadsheets. The system will automatically pick up changes, and make the relevant adjustments.
For you, this means less risk, less manual work, less stress and headache; and more effective compliance, more of the big picture view, and more time to work on value-adding activities.
Plus, other stakeholders in the ecosystem will appreciate this too – for example, auditors can now easily access the audit trail, see the source documentation, and be able to rely on the entire automated process.