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The clock is ticking to implement the GASB 87 lease standard. If you haven’t started, you’re already behind. Compliance can be easier with KPMG.
While the GASB has extended the implementation deadline, governments who have started the implementation have found that:
- Compiling the total contract population subject to lease accounting and reviewing those contracts to determine if they meet the revised definition of a lease is difficult and requires additional resources with subject matter knowledge.
- Lease terms and conditions are not always straight forward and require coordination with the legal and other departments for interpretation.
- Multiple components in the lease agreements require allocation and are difficult to separate.
- Calculating lease components for the financial statements cannot be done via excel workbooks, software solutions will be required.
All of this takes time, and even with the deadline extension, governments are realizing that they are still behind. In addition to the technical accounting and financial reporting changes, business process changes will be required to comply with the lease standard going forward. Governments need to consider:
- How the contract and lease documents should be structured early in the procurement stages so that the desired accounting is achieved
- Whether a threshold should be set to account for leases
- Who in the organization will be responsible for identifying, evaluating, and monitoring the lease throughout the contract period
The implementation and ongoing maintenance of the standard goes beyond the accounting function, and will likely impact legal, procurement, real estate, asset management, treasury, budgeting, contract management and IT departments.
How KPMG can help
Having assisted the first wave of adopters through lease accounting change, we bring many lessons learned. We provide the right balance of solutions and compliance so that easing processes and policies are both effective and efficient. Our team can quickly assess where you are, where you need to be, and how to close the gap.
Having assisted the first wave of adopters through lease accounting change, we bring many lessons learned. We provide the right balance of solutions and compliance so that easing processes and policies are both effective and efficient. Our team can quickly assess where you are, where you need to be, and how to close the gap.
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