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Lease accounting compliance work won’t end after Q1 2019 public filings

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According to a February 2019 Deloitte poll, nearly half of public company executives see no slowdown ahead in the time and effort to be spent for implementation of lease accounting standards issued by the FASB and IASB. In fact, after they file Q1 2019 earnings, one-quarter (25 percent) expect to spend the same amount of time and effort on lease implementation and nearly as many (23.9 percent) plan to spend more. https://deloi.tt/2FKmLmz

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Lease accounting compliance work won’t end after Q1 2019 public filings

  1. 1. Lease accounting: A Q&A with public company finance leaders Deloitte poll results from February 2019
  2. 2. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 2 Methodology C-suite and other executives were polled online during a Deloitte Center for ControllershipTM Dbriefs webcast, titled “Lease accounting: A Q&A with public company finance leaders,” on Feb. 28, 2019. Similar online polls were conducted in October 2018, April 2018, January 2018, May 2017, October 2016 and March 2016. Answer rates differed by question and respondents differed by webcast poll. In some instances, immaterial amounts (e.g., +/- 0.1%) have been added to or removed from the “Don’t know/not applicable” answer responses to bring results to 100% total for each question. 950+ 2
  3. 3. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 3 3.3% 22.0% 7.1% 48.0% 4.0% 40.3% 3.8% 32.3% 3.2% 42.2% 3.5% 33.0% 4.3% 44.6% 5.7% 25.4% 5.7% 40.0% 6.1% 29.9% Early adopt, public company Adopt on schedule, public company Early adopt, private organization Adopt on schedule, private organization Mar-16 May-17 Apr-18 Oct-18 Feb-19 Which best describes your organization’s likely lease accounting implementation timeline? Findings over time; C-suite and other executives only Votes received: 1,320 (Mar 2016); 2,562 (May 2017); 2,321 (Apr 2018); 1,922 (Oct 2018); 1,781 (Feb 2019) Don’t Know / Not Applicable = 19.6% (Mar 2016); 19.6% (May 2017); 18.1% (Apr 2018); 20% (Oct 2018); 18.3% (Feb 2019) Public companies Private organizations
  4. 4. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 4 How prepared is your organization to comply with the new lease accounting standard? Findings over time; C-suite and other executives only Votes received: 946 (Oct 2016); 1,976 (May 2017); 1,838 (Apr 2018); 1,367 (Oct 2018); 1,322 (Feb 2019) Prepared = Respondents selecting “extremely prepared” or “very prepared” answer options. Unprepared = Respondents selecting “not too prepared” or “not at all prepared” answer options. Don’t Know / Not Applicable = 5.2% public and 6.3% private (Oct 2016); 4.6% public and 4% private (May 2017); 3% public and 4.5% private (Apr 2018); 3.2% public and 3% private (Oct 2018); 1.8% public and 6.1% private (Feb 2019) Prepared Somewhat prepared Unprepared Public companies Private organizations 44.8% 44.2% 45.2% 36.1% 33.2% 41.1% 45.3% 41.4% 44.4% 43.8% 7.8% 6.5% 8.9% 16.5% 16.9% Oct-16 May-17 Apr-18 Oct-18 Feb-19 26.7% 26.4% 21.4% 9.4% 6.9% 45.5% 51.2% 52.6% 41.9% 30.6% 22.6% 17.8% 23.0% 45.5% 60.7% Oct-16 May-17 Apr-18 Oct-18 Feb-19
  5. 5. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 5 Which technology approach is your organization using to implement lease accounting? Not Applicable = 3.7% public and 4.6% private (Feb 2019) C-suite and other executive findings Votes received: 1,389 (779 public, 610 private; Feb 2019) 52.6% 30.8% 6.7% 6.2% 13.4% 43.8% 29.5% 8.7% Lease accounting specific software Manual efforts and existing software (i.e., not lease accounting specific software) Don't know, still trying to determine approach to adoption Don't know, reassessing technology as initial lease accounting software effort did not work Public companies Private organizations
  6. 6. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 6 Will the time and effort your organization spends on lease accounting implementation change after its first quarter financial reporting under the new leases standard(s)? Don’t Know / Not Applicable = 13.8% public and 24% private (Feb 2019) C-suite and other executive findings Votes received: 1,285 (715 public, 570 private; Feb 2019) 23.9% 25.0% 37.3% 27.4% 27.9% 20.7% Yes-Increase: We plan to spend more time and effort honing our implementation work in the year ahead No change: We plan to spend the same amount of time and effort spent on implementation in the year ahead Yes-Decrease: We plan to spend less time and effort on implementation work in the year ahead Public companies Private organizations
  7. 7. Lease accounting: A Q&A with public company finance leadersCopyright © 2019 Deloitte Development LLC. All rights reserved. 7 Media contact Shelley Pfaendler Public Relations Deloitte Services LP spfaendler@deloitte.com Dan Mucisko Public Relations Deloitte Services LP dmucisko@deloitte.com Full press release available on Deloitte.com 8
  8. 8. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. Copyright © 2019 Deloitte Development LLC. All rights reserved. The statements in this report reflect the aggregation of poll responses and are not intended to reflect facts or opinions of any entities. All data, charts and statistics referenced and presented, as well as the representations made and opinions expressed, unless specifically described otherwise, pertain only to the participants and their responses to the Deloitte poll. The information obtained during the poll was taken “as is” and was not validated or confirmed by Deloitte. This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.

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