FASB Impact for Corporations

Market Insights

CoStar Real Estate Manager is a system we use to monitor corporations portfolios. They provide excellent resources to help educate their customers. Here is an excerpt from their most recent FASB update:

Lease obligations will soon be top-of-mind with CFOs. Fortunately, we’re ready to help.

Financial regulations and compliance is the top of mind for financial executives across the globe and your lease obligations probably represent a significant liability for your organization. You need to analyze your lease portfolio and classify your leases according to the new FASB Standard and you need to pay your rent and expense obligations. Lease Accounting helps you do both. It easily handles your most complex rent calculations including percentage rent and can even manage your subleases if you have them.

Key Capabilities

  • FAS 13 Capital and Operating Lease Tier ad accounting
  • Assistance in facilitating restatements
  • Support of IFRS and FASB requirements.
  • Client-definable financial periods
  • 13 period accounting
  • Rent and expense forecasting
  • Rent and expense payments
  • Rent and expenses approval
  • Straight line rent calculation and journal entry
  • Common area maintenance reconciliation
  • Expense reconciliation
  • Percentage rent calculations
  • Percentage rent accrual calculations and journal entry
  • New FASB standard classification
  • Subleases including receivables
  • One-time charges and manual check requests
  • Construction allowance and tenant improvement contributions

CoStar Real Estate Manager has already established itself as a leader in FASB preparedness. A CPA Journalarticle co-authored by CoStar Real Estate Manager’s Jim Dooley and entitled “Preparing for the Looming Changes in Lease Accounting” discusses our technological solution for the information challenges posed by the new regulations and provides a case study insight into how Mohawk Industries is managing all of its leases in preparation for the lease accounting changes. Download a copy of the article (PDF) here.

Questions to assess your organization’s preparedness for FASB new lease accounting standards:

  • Do you have a comprehensive inventory of all your leases; both real estate and non-real estate?
  • Do you have complete, dependable and accessible lease data?
  • Can you handle the workload for the one-time transition project?
  • Do you know the impact the changes will have on your financial statements?
  • Are you ready to defend your lease information?
  • Does your current accounting process allow you to produce the necessary audit trail?
  • Have you ensured secure access to the information?
  • Are you ready to restate your financial statements?
  • Will you be able to restate your Income Statement for the past two years or more?
  • Will you be able to restate your Balance Sheet for two years or more?
  • Will you be able to restate your Statement of Cash Flows?
  • Will you be able to support local accounting requirements abroad as well as domestic consolidated needs?

FASB Readiness Service Offerings

CoStar Real Estate Manager delivers FASB Readiness Service Offerings that help you:

  • Take an intense look at your data accuracy and completeness, including the processes you have in place by which your lease information is obtained, maintained and secured.
  • Manage the massive additional workload of the transition period and beyond to ensure initial and sustained compliance with the new policies.

Readiness Assessment

Through a consultative review of your existing data and processes, the CoStar Real Estate Manager Readiness Assessment takes a comprehensive look at your ability to adopt the new standard.

  • A thorough review of current systems used to manage real estate and non-real estate leases.
  • A thorough review of current documentation of policies, procedures and work flow.
  • A thorough review of current documentation for critical data management and reporting.
  • A gap assessment of the current state of data against new data standards recommended for compliance.

Lease Data Audit

The CoStar Real Estate Manager Lease Data Audit is designed specifically to make sure your lease information is reliable and ready for the new FASB standard. We can help you identify any weaknesses in your data, and ensure you address any quality and compliance issues well before they become problematic for your financial reporting.

  • An audit of your current inventory of document and data records for completeness and accuracy.
  • Development of data management documentation processes and instructions.
  • A full review of each relevant data element against legal documents and your business specifications.

Lease Data Abstracting

The new lease accounting standard will require that companies do more with their lease data. The CoStar Real Estate Manager Lease Data Abstracting initiative will identify any gaps in the data you currently track, then work with you to develop best practices for abstracting additional lease data as required.

  • Identify missing or inconsistent data and data formats.
  • Abstract and/or update relevant data elements.
  • Enter and update FASB calculation data.
  • Define and document instructions for compliance.

Non-Real Estate Leases

The new FASB lease accounting changes will also apply to non-real estate leases including fleets of automobiles, tractor trailers, forklifts, manufacturing equipment, office equipment and more. While equipment leases are not generally as large or complex as typical real estate leases, expert skills are still required to ensure the right information is abstracted and the data validated. CoStar Real Estate Manager’s platform also supports these type leases and may be used by other stakeholders in your organization to consolidate and report on necessary information.