Many state and local governments and public higher education institutions are not aware of the time, effort, and specialized skills it takes to implement and comply with the GASB Statement No. 87, Leases. 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. These considerations should help:
- Analyze your contract portfolio to determine if contracts meet the revised definition. Contracts or components of contracts not previously identified as leases could be subject to the new lease reporting requirements. Identifying and gathering the necessary information for the complete population of leases is critical.
- Modify policies and procedures so your organization regularly reviews new and modified leases. This step helps ensure compliance with the lease standard going forward.
- Determine if existing information technology can monitor and maintain future compliance. Systems will need to produce lease general ledger journal entries and required financial statement disclosures. Generally, depending on the number of leases you have, software is recommended as it can provide the calculations, disclosures, and internal controls necessary to withstand audits.
Ready for the GASB 87 lease standard deadline?
How KPMG can help
KPMG can assess where you are, where you should be, and how to complete your GASB 87 implementation. Our artificial intelligence–powered KPMG Cognitive Contract Management tool, which leverages robotic process automation and machine learning to quickly ingest and evaluate whether your contracts meet the revised lease definition, can help simplify and accelerate your implementation. The result is a smooth and efficient lease evaluation and maintenance process for the long-term.
We combine the cutting-edge tool with leading professionals that bring in-depth technical accounting knowledge, industry experience, and lessons learned from assisting the first wave of adopters through lease accounting change to help meet your organization’s unique needs.
