Checklist for ASC 842 Compliance

Getting Started

Assemble strategic team to set out requirements, goals, and timelines
Establish contact with other executives who might be relevant to the transition process
Share the likely impact of the implementation of ASC 842 with relevant stakeholders
Engage with auditors as early as possible

Evaluate solutions
- Ensure chosen solution contains latest available features such as OCR (optical character recognition) and AI-enhanced automation capabilities
- Ensure solution chosen is automatically updated with ongoing changes to ASC 842
- Confirm that technology solution chosen will save your team time and effort, and not cost additional time and effort
Establish timeline for training on new accounting software

Finalize the company’s relevant accounting policies
Establish the necessary internal controls – such as approval for new leases, and internal communication regarding possible lease modification
Perform the primary technical accounting analysis, including calculating and documenting the Incremental Borrowing Rate (IBR)
Create new ledger accounts
Gather all lease contracts and contracts that may contain leases, per the standard’s definition
Re-engage with relevant executives and departments heads regarding the potential for leases that may have been missed, such as embedded leases
Go over ledger accounts for evidence of any leases that may have been missed (such as regular expense payments)
Upload leases into relevant lease accounting platform
Double-check all journal entries
Ensure satisfaction with disclosure (both qualitative and quantitative)
Schedule time for post-implementation review to ensure ongoing compliance