ASU No. 2016-02, Leases (Topic 842), changes the financial reporting obligations of companies that enter into leasing transactions for assets such as real estate, vehicles and equipment. It will significantly affect your organization if you have arrangements that need to be accounted for under the new standard.

• Financial statements will be affected with lease related assets and liabilities coming on to the balance sheet
• Agreements beyond traditional leases may need to be accounted for under the new standard
• Financial arrangements such as debt covenants may be negatively affected
• Additional financial statement disclosures will be needed
• Internal training, policies and procedures and new internal controls regarding application of the standard will be needed for finance departments and financial statement users
• Companies with large numbers of leases to manage may need to implement software solutions, as well as processes and internal controls over those systems

Public companies: Fiscal years beginning after Dec. 15, 2018

All other entities: Fiscal years beginning after Dec. 15, 2019

Gather and talk to your stakeholders:

It’s important to gather the people that need to be involved throughout the process and get their input on the effort they think your organization will need to expend.

Talk to your Baker Tilly advisors:

Talk with your advisors and begin to understand the process and how your organization can successfully implement accounting and systems changes for long-term success with leases accounting.