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Optimal Leasing LLC
Larry Robinson / 248.738.2699
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Optimal Leasing LLC

Optimal Leasing LLC has operated as an independent Minority Business Enterprise Lessor with an emphasis on Capital equipment primarily IT, Data Storage, Telecom, Point of Sale, Medical and Material Handling equipment. Average projected deal size is between 100K – 3M. Equipment transactions above 3M are welcomed. Lease financing is available for North America and Canada.

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LeaseCrunch Survey of Auditors at 77 US CPA Firms Finds 58% Believe That New Recognition of a Lease Obligation Will Adversely Affect Loan Covenants For Their Clients
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45% don't think existing controls at clients are adequate to ensure identification, classification and documentation of existing leases and existing controls generally will require revision/enhancement and 32% think that the existing controls are adequate. 57% say that the implementation of the new revenue recognition guidance and the new leasing guidance in consecutive years is an issue and is straining resources and 59% say that the FASB should have allowed for more time between revenue recognition and lease initiatives to allow for easier implementation.

In a survey of auditors at 77 US CPA firms conducted by LeaseCrunch, 58% believe that the new recognition of a lease obligation will adversely affect loan covenants for their clients.

LeaseCrunch is the only lease accounting software made by former CPA firm auditors for CPA firm auditors, with a development team made up of CPAs, former Big 4 public accounting auditors, accounting academics and a former FASB staff member.

Questions asked on survey:

1) Have you started conversations with clients about meeting the new lease accounting reporting requirements?

Yes    90%
No    10%

(Responses for CPA firms that have started conversations with clients about the new lease standard.)

Do you have any clients who are, or will be, early adopters of the new lease standard?

Yes, public and private 4%
Yes, private only 22%
Yes, public only 1%
No 72%

Have there been any problems with: {could select multiple responses}

Determining which practical expedients should be applied 22%
No problems so far 21%
Book vs. tax implications 17%
Determining the incremental borrowing rate 14%
Accounting for operating leases 11%
Determining the lease term 9%
Don't yet know what problems may exist 6%

2) Have any clients raised the issue of potentially violating bank loan covenants when the new lease standard impacts the balance sheet?

Yes    68%
No    32%

3) In general, do you think that recognition of a lease obligation will adversely affect loan covenants for your clients?

Yes    59%
No    41%

4) Have your clients completed an inventory of their leases?

Yes, completed 14%
Most have started 20%
A few have started 43%
None have started    22%

5) For clients who completed an inventory of their leases, was the actual number of leases more or less than thought?

More than thought    17%
Less than thought 1%
What was anticipated 48%
I don't know 33%

6) Are existing controls at clients adequate to ensure identification, classification, and documentation of existing leases?

Yes, existing controls generally are sufficient 32%
No, existing controls generally will require revision/enhancement    45%
Controls generally have not been documented or tested 23%

7) Do you expect your clients to adopt the package of practical expedients on transition?

Yes, most will elect the practical expedient package 60%
No, most will elect to apply the new standard immediately 3%
Still under consideration 38%

8) Do you expect clients to separate lease and nonlease (e.g., service elements) components within a lease or elect the practical expedient that permits a lessee to combine lease and nonlease components to calculate the lease liability?

Generally expect clients to elect separate accounting and a smaller liability/obligation 8%
Generally expect clients to elect the practical expedient 55%
Too soon to tell 38%

9) Do you expect private clients to determine an incremental borrowing rate following the revised guidance or to elect the practical expedient to use a risk-free rate?

Generally expect clients to determine an incremental borrowing rate 18%
Generally expect clients to elect the practical expedient and use the risk free rate 40%
Too soon to tell 42%

10) Do you have any questions about any of the following topics as they relate to the new lease accounting standard: {could select multiple responses}

I have no questions about the new lease standard    22%
Policy elections and practical expedients 18%
Book vs. tax implications 14%
Guiding clients on how to collect lease data 13%
Selecting a software solution 12%
Impact on debt covenants 11%
Identifying and classifying client leases 10%

11) Do you feel the FASB has adequately explained what is required for you to help clients comply with the new lease accounting standard?

Yes    75%
No    25%

12) Does implementation of the new revenue recognition guidance and the new leasing guidance in consecutive years an issue with clients?

Yes, implementation is straining resources 57%
No, there is little or no overlap between the two standards 19%
Too soon to tell 23%

13) With major changes to revenue recognition and leases in consecutive years, should FASB have allowed for more time between initiatives to allow for easier implementation?

Strongly agree with more time between standards    27%
Agree 32%
Neutral 27%
Disagree 12%
Strongly disagree, no need for more time between standards 1%

The survey was conducted in September and October 2018.

For more information go to: http://www.LeaseCrunch.com

Press Contact:
John Vita
John Steven Vita Communications
John.vita(at)jsvcom.com
847/853-8283



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