Our goal is to help customers smoothly and quickly align with the new lease accounting standard to mitigate the risk of material weaknesses and financial statements
Reston, Va. - LeaseAccelerator, the pioneer in the Enterprise Lease Accounting software market, has developed a testing application called the Lease Accounting Validator that automates the testing of leases under the new ASC 842 and IFRS 16 standards, as well as frozen GAAP. With the initial deadlines passed on January 1st, 2019, public companies need to know that the lease accounting software they selected works for their specific portfolio, and not just for a handful of generic or illustrative examples.
When the combinations of rent, classifications, financial variables, fiscal calendars and contract options are considered, there are almost 100 billion possible scenarios that can occur in real estate and equipment leases. Examples of the various elements which drive the different scenarios include the timing and frequency of payments, rent and contractual modifications as well as the planned and actual end-of-term options.
The Lease Accounting Validator analyzes each lease in a customer's portfolio to identify the permutations of lease terms and fiscal periods as well as the expected and actual events that occur during the life of a lease. It then automatically executes the processes and reporting needed to calculate and then validate the accuracy of all of the journal entries throughout the lease from the initial commencement to the end of term. The Validator also automatically analyzes test results to ensure that the calculations tie out.
"Most software vendors are focused myopically on achieving 'day one' compliance with accurate beginning balances at the Effective Date. Their test plans are limited to the handful of illustrative examples included in the new standards," said Jonathan Crawford, CTO of LeaseAccelerator. "However, real-world leases involve a variety of changes that must be collected, accounted for, and tested within each close period. They present a much bigger challenge," noted Crawford.
Without an automated testing system like the Lease Accounting Validator, customers, partners and software providers alike would need to hire staff to perform time-intensive test planning and execution activities. Test plans and scripts would need to be updated periodically as the composition of the lease portfolio changes and new use cases emerge. Test results would also need to be manually validated to ensure that account balances tie out when expected and that calculation results are accurate.
"This is a game-changing innovation for our clients", said Michael Keeler, CEO of LeaseAccelerator. "The Lease Accounting Validator provides quantified evidence of the accuracy of our accounting calculations, which gives our clients and their auditors the transparency and confidence they need. LeaseAccelerator is the only vendor in the market able to meet this critical audit requirement for ASC 842 and IFRS 16 quality assurance metrics, which is why many companies have switched to LeaseAccelerator," noted Keeler.
The new lease accounting standards, which began to take effect for some public companies at the end of 2018, change the way public companies report leases in their quarterly and annual financial statements. Many real estate and equipment lease obligations, previously only disclosed in the financial statement footnotes, will now be capitalized on corporate balance sheets. The International Accounting Standards Board (IASB) estimates that over $2.2 Trillion of assets and liabilities will transfer onto corporate balance sheets in the coming years.
London - LeaseAccelerator, the pioneer in Enterprise Lease Accounting solutions, announced today that IFRS 16 lease accounting expert John Kuett has joined the company as its new Vice President, Lease Accounting EMEA. Kuett brings over 20 years of experience leading financial reporting, accounting and compliance for multinationals.
Based in Switzerland, John Kuett was most recently the Reporting Specialist at Nestlé, a $100 billion international consumer products manufacturer, where he was responsible for the implementation and application of changes in the International Financial Reporting at Group level. At Nestlé, Kuett established and updated the company's internal and external financial reporting guidelines, as well as provided vital advice and support on how the guidelines applied to specific issues and transactions across the global businesses.
Most recently, John led Nestlé's early adoption of IFRS 16 on the company's SAP platform using a full retrospective transition approach and then set up a leasing global centre of excellence in the firm's shared services organization. Prior to that, John led the project team for IFRS 15 Revenue from Contracts with Customers. He also directed training of the global Nestlé Finance & Control community. John Kuett's previous roles include Controller and Assistant Treasurer at Jenny Craig, Inc. and Vice President and Controller at Frederick's of Hollywood.
Kuett is a leading industry IFRS expert, specialising in topics such as IFRS 15 Revenue, IAS 16 Property, Plant & Equipment, IFRS 16 Leases, IAS 36 Impairment of Assets, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and IAS 38 Intangible Assets.
"John's extensive experience will be invaluable in helping our clients succeed with their IFRS 16 compliance projects," said Michael Keeler, CEO of LeaseAccelerator. "He understands the interrelationships and dependencies among all of the IFRS standards – not just IFRS 16. As a former corporate controller, he can brainstorm and collaborate with our customers at all levels and at every stage of their implementation project and long-term operations."
"To adopt IFRS 16 without breaking the bank, companies need to substantially change how they manage, control and account for leases by automating the processes as much as possible," said John Kuett. "I joined LeaseAccelerator because its mission is to take costs, risks and time out of the global close process through automation. This is what controllers need right now. In my new role, I'll help customers and partners with all aspects of their LeaseAccelerator IFRS 16 implementation projects."
John will be speaking at the IFRS 16 – Application in Practice conference on 5 March in Amsterdam. His presentation, IFRS 16 Leases - Beyond Day 1, will explore the challenges and best practices associated with maintaining the integrity of the lease database, capturing ROU activity for reporting and disclosure, and achieving efficiencies and cost savings.