Now is the time to push forward to adopt the new standards as soon as possible – and not for compliance reasons alone. Discover why reading our latest blog!
The deadline for new IFRS16/ASC842 Lease Accounting standards has been extended for private companies for an additional year.
But this is no time to chill.
In fact, now is the time to push forward to adopt the new standards as soon as possible – and not for compliance reasons alone. Moving quickly toward adoption also opens the door for Finance to respond to other significant trends occurring across industries and businesses of all sizes.
The explosion of data is driving these trends—and, in turn, the urgent need for action. A recent Ernst and Young survey found that 71% of CFOs say non-financial data is improving their decision making abilities, with 74% stating that their stakeholders now require more information and analysis from both financial and non-financial data.
The need to incorporate and generate useful insights from this data is ramping up pressure on Finance to establish a new range of drivers and KPIs going forward. Yet, the same survey also found that, in most cases, the Finance must rely on multiple reporting systems to keep pace with current reporting and regulatory demands that are only going to increase.
The single solution answer
Patching together multiple systems to address these challenges is increasingly difficult, and extremely inefficient. Clearly, there’s a need for a single solution that can enable Finance to efficiently address the current and future reporting and regulatory needs.
A single system not only addresses the technical challenge but also emerging trends among Finance professionals. A new generations of talented and tech-savvy financial professionals want to work on Finance teams that have the where-with-all and mindset to address the new challenges of marrying financial and non-financial data in ways that deliver insights that help guide the business and inform better decision making.
The tools and technology exist to make this happen. Large data stores are available at increasingly lower costs, both on cloud and on premises. Further, emerging technologies such as robotic process automation (RPA), artificial intelligence (AI) and machine learning make checking and aligning data for consistency easier than ever before.
The new IFRS16/ASC842 Lease Accounting standard is an example of an inevitable reporting and data challenge that must be met by all organizations in the next year. CFOs must integrate a solution that not only accurately applies the accounting rules of the standard, but does so in a timely manner that won’t delay or hamper the existing close process.
Technology that thinks like an accountant
What’s needed is a solution that can think like an accountant while providing your organization with all of the needed journals and adjustment transactions that feed the ERP and Financial Reporting systems. The technology must then intelligently inform both the balance sheet and the profit and loss statement results in tandem.
CCH Tagetik offers the right fix - a single solution that not only addresses the requirements of IFRS16/ASC842 Lease Accounting, but also offers robust capabilities to keep pace with emerging challenges and opportunities. CCH Tagetik’s Lease Accounting solution efficiently handles the tracking and disclosure requirements of the new standards while also adding intelligent controls and greater consistency on lease management going forward.
CCH Tagetik’s solution is turn-key. It’s designed to load and manage the leases being tracked, coupled with all of the required disclosure reports prebuilt and ready to go. The application relies on the same CCH Tagetik platform used by organizations around the globe for FP&A as well as close and consolidations processes.
Iterative and easy to integrate
CCH Tagetik’s solution features iterative capabilities that can add powerful functionality over time. This allows lease data and projections to be added to ongoing budgets and forecasts. It also marries the results to existing closed financials rapidly and accurately, providing all of the insights and a view on how the leases are impacting important KPIs that your company needs to report.
The solution comes with CCH Tagetik’s built-in capacity to integrate with the entire Microsoft Office line of products. Not only is Excel used as the pallet for creating additional reports, the IFRS16/ASC842 Lease Accounting results can also be integrated with PowerPoint and Word, ensuring that the specific reporting needs and perspectives of stakeholders can be addressed directly and rapidly.
What’s more, the solution also has its own email server and built in scheduler (or the option to integrate with Outlook), which allows the application additional functionality for tracking and notifying on lease status’ and changes, over time.
Taking Finance to the next level
CCH Tagetik has been applying this solution globally as IFRS16, which has been largely adopted over the last three years in Europe, Asia as well as the Americas. In many cases we’ve seen customer’s leveraging opportunities to expand the application well beyond simple lease accounting.
For example: creating an environment for matching lease payments and receipts against the projections developed in the lease accounting engine. This simple task allows the CFO and controller to see and document where differences may exist, while also providing visibility into the impact of key lease decisions such as the taking or not taking some of the policy electives.
Further, the application can be used to study the impact on projected financials if a terminate, extend or buy decision is applied to one or more contracts in the portfolio. All of these functions are processed consistently and accurately and can be staged with the lease data in a simulation environment, allowing such choices to be applied and reviewed without affecting the existing and ongoing system.
CCH Tagetik solution can be integrated rapidly to not only address the IFRS16/ASC842 Lease Accounting standard, but also, over time, address additional management reports as well as act as an evaluation engines for existing and future lease contracts.
Most important, it will do so with a solution that can be owned and managed by Finance, and does not require scripting to apply GAAP to results or generated journals
So don’t just focus on meeting the deadline for IFRS16/ASC842 Lease Accounting. Instead, view the deadline as the catalyst to take your Finance team to the next level.