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Core Catalysts - Lease Accounting FASB ASU 2016-02, Leases Presentation for Banks Aug. 2017

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This lease accounting presentation is tailored for banks and financial services. It includes an overview of the new FASB lease standards, a list of potential implications for banks, and how external consultants can be leveraged to help implement the major lease accounting changes.

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Core Catalysts - Lease Accounting FASB ASU 2016-02, Leases Presentation for Banks Aug. 2017

  1. 1. Lease Accounting FASB ASU 2016-02, Leases Presentation for Banks August 4th, 2017 Core Catalysts • 10500 Barkley, Ste 225, Overland Park, KS 66212 • 913.762.9400 • www.CoreCatalysts.com
  2. 2. Agenda • Introductions • Brief survey of participants • Overview of lease accounting • Discussion of topics in regards to Banks • Summary Confidential and Proprietary 2
  3. 3. Brief Survey • Current knowledge of revenue recognition and lease accounting • Expectations for session Confidential and Proprietary 3
  4. 4. Definitions • FASB – Financial Accounting Standards Board • ASU – Accounting Standards Update • GAAP – Generally Accepted Accounting Principles • IFRS – International Financial Reporting Standards Confidential and Proprietary 4
  5. 5. Confidential and Proprietary 5 Introduction • Lease accounting becomes effective in 2019 for a subset of companies (all public companies and private companies with conduit bonds) with potential look backs to 2017 leases. • Private companies have effective date of 2020. • This effort is expected to increase transparency for current and potential stakeholders. • The effort required to comply with this FASB is expected to be fairly large and will involve many parts of the company during implementation and will involve using external consultants. • The anticipated value to the company by implementing this FASB is unclear and perceived by many inside various companies to provide limited to no value.
  6. 6. Summary of FASB Confidential and Proprietary 6 * View in browser at http://www.corecatalysts.com/snapshot-lease-accounting/
  7. 7. Company Efforts* • Cross functional governance (many different departments can be involved) • Contract and Lease inventory • Lease management process documentation • Software tool investigation, acquisition and implementation • Process and policy review and changes • Financial reporting and controls integration • External stakeholder communications Confidential and Proprietary 7 * See Process Flow at http://www.corecatalysts.com/lease-accounting-implementation/
  8. 8. Potential Implications To Banks • Financial reporting from companies will change and will need to be understood; does new transparency bring up any causes for concern in regards to risks? • Covenants for loans may be broken; need for changes to loan agreements • Underwriting criteria may need to be adjusted to reflect new FASB requirements • Banks as Lessors to companies may receive requests for lease term changes Confidential and Proprietary 8
  9. 9. Value Proposition from Core Catalysts to Lessees Use Core Catalysts to augment implementation efforts in order to reduce fees to external accounting firms and to handle a ‘bubble’ or ‘surge’ of work where full time resources may not be required. Leverage Core Catalysts repository of proven information and processes already gathered/developed in order to reduce company’s time and resources. Use Core Catalysts inventory of business improvement strategies during this process in order to distill some business value from this compliance effort. Confidential and Proprietary 9
  10. 10. How Core Catalysts Can Help Lessees • Lease inventory and assessments • Assess current capabilities of existing technology • Perform lease data gap analysis • Team with accounting guidance efforts (external accounting firms, internal efforts) • Develop implementation roadmap that includes all impacted areas • Program management of roadmap in conjunction with governance oversight chosen by company • Lease management software selection and project management of integration/implementation efforts • Lease acquisition and management - process improvement • Development and integration with existing controls strategy • Assistance with initial reporting cycles • Documentation of accounting policies, operating procedures • Development and implementation of training modules for teams affected Confidential and Proprietary 10
  11. 11. Learn More About Lease Accounting • Lease Accounting Implementation Workflow - http://www.corecatalysts.com/lease- accounting-implementation/ • Lease Accounting Insights White Paper - http://www.corecatalysts.com/whitepape rs/lease-accounting-insights/ Confidential and Proprietary 11
  12. 12. Contact Info • Jim Wadella – Managing Member – jim.Wadella@corecatalysts.com • Greg Wallman – Senior Manager – greg.wallman@corecatalysts.com • General Contact - http://www.corecatalysts.com/contact/ Confidential and Proprietary 12

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