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Lease accounting implementation enters final stretch

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In a recent Deloitte Center for ControllershipTM poll of more than 3,850 professionals — many working in accounting (53 percent) and finance (21.5 percent) — about lease accounting implementation, just 21.2 percent of finance, accounting and other professionals say their companies are “extremely” or “very” prepared to comply with the Financial Accounting Standards Board’s (FASB) and International Accounting Standards Board’s (IASB) respective new lease accounting standards. https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/few-highly-prepared-to-implement-lease-accounting-standards-as-deadline-nears.html?id=us:2sm:3ss:leases0318:awa:adv:031918:0118

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Lease accounting implementation enters final stretch

  1. 1. Lease accounting implementation enters final stretch Deloitte poll results from Jan. 31, 2018
  2. 2. 2Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. Methodology 3,890+ professionals participated in a Deloitte Center for ControllershipTM Dbriefs webcast, “Lease accounting implementation enters final stretch,” on Jan. 31, 2018 about their current lease accounting implementation efforts. Similar online polls were conducted in May 2017, October 2016 and March 2016. Answer rates differed by question.
  3. 3. 3Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. How prepared is your organization to comply with the new lease accounting standard? Total findings over time Votes received: 7,404 (Mar. 2016); 3,081 (Oct. 2016); 6,873 (May 2017); 4,379 (Jan. 2018) Prepared=those selecting “extremely prepared” or “very prepared” answer options. Unprepared=those selecting “not too prepared” or “not at all prepared” answer options. Don’t know/not applicable=20.2% (Mar. 2016); 24.4% (Oct. 2016); 21.4% (May 2017); 19.7% (Jan. 2018) 9.8% 13.8% 14.6% 21.2% 35.7% 28.0% 23.8% 18.2% March 2016 October 2016 May 2017 January 2018 Prepared Unprepared
  4. 4. 4Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. Votes received: 4,869 Will the amount of time and effort your organization spends on lease accounting implementation change in the next 12 months, as a result of the FASB’s November 2017 board meeting decisions? Don’t know/NA=32.5% Yes--Increase 29.7% 27.7% 10.2% No Change Yes--Decrease
  5. 5. 5Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. Comparing 2016 and 2018 findings Votes received: 3,175 (Oct. 2016); 4,660 (Jan. 2018) Which will pose the largest implementation challenge for your company’s lease accounting standard compliance efforts in the next 12 months? 32.6% 18.0% 10.4% 9.6% 3.6% 24.7% 16.3% 9.4% 15.0% 5.3% Collecting necessary data on all organizational leases in a centralized, electronic inventory Implementing multiple new accounting standards (e.g., revenue recognition and/or current expected credit loss) simultaneously with lease… Determining whether IT solutions currently in place for tracking lease data can manage handle lease accounting implementation and compliance Figuring out where to start the implementation process Overcoming board and executive assumptions that implementation will have little or no impact on financial reporting and operations January 2018 October 2016 Don’t know/NA=29.3% (Oct. 2016); 25.8% (Jan. 2018)
  6. 6. 6Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. 2.6% 6.4% 50.6% 1.8% 1.4% Yes-we plan to buy more real estate than we lease Yes-we plan to buy more equipment than we lease No change expected Yes-we plan to lease more real estate than we buy Yes-we plan to lease more equipment than we buy Votes received: 3,890 Has your organization’s lease versus buy strategy for the next 12 months changed as a result of lease accounting standard implementation? Don’t know/NA=37.2%
  7. 7. 7Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. Votes received: 4,822 Which best describes your organization’s approach to lease accounting standard implementation? Don’t know/NA=34.8% Implementing a standalone “point solution” software specific to lease accounting Leveraging existing processes and software not specific to lease accounting Implementing an enterprise solution within our ERP system Implementing fully integrated lease management or lease accounting software Developing custom software in-house specific to lease accounting 27.1% 13.3% 10.9% 10.6% 3.4%
  8. 8. 8Lease accounting implementation enters final stretchCopyright © 2018 Deloitte Development LLC. All rights reserved. Media contact Shelley Pfaendler Public Relations Deloitte Services LP spfaendler@deloitte.com Full press release available on Deloitte.com
  9. 9. 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. 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 © 2018 Deloitte Development LLC. All rights reserved.

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