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Poll: Corporate Executives Worried About New Lease Accounting Compliance
According to a recent Deloitte poll, nearly half the responding top-level corporate executives are worried about their companies' ability to comply with the upcoming lease accounting changes in a timely manner.
Although the beginning date for compliance with the new Financial Accounting Standards Board's (FASB) and International Accounting Standards Board's (IASB) new lease accounting standards is still approximately 18 months away for U.S.-based public companies, 47.1% of high-level corporate executives are concerned about their organizations' ability to implement on time.
The Poll
Deloitte polled more than 2,150 C-suite executives and other executives about lease accounting implementation. Respondents largely work in the consumer and industrial products (33.6%), financial services (32.8%) and technology, media and telecommunications (12.2%) industries. Similar online polls were conducted in March 2016 and October 2016.
From a sector perspective, corporate leader concerns about implementing lease accounting standards on time were highest in: oil and gas (56.2%); consumer products (55.9%); retail, wholesale and distribution (54.3%); health care providers (53.6%); and media and entertainment (52.6%).
“The large number of executive leaders still expressing concern regarding lease accounting implementation halfway into the three-year preparation window is indicative of the complexity of the issue,” said Sean Torr, Deloitte Risk and Financial Advisory managing director, Deloitte & Touche LLP. “Lease accounting implementation has several long lead-time activities, including process and system enhancements, data collection and validation, and effective stakeholder engagement. These activities require a broader scale and scope than many companies initially contemplated.”
Corporate Preparation
Executives showed modest improvement on the preparation front. In Deloitte's latest poll, 31.4% of executives said their organizations were unprepared to comply with the new lease accounting standard, trending lower than in October 2016 (34.9%) and March 2016 (43.6%) shortly after the FASB and IASB standards were issued. Only 11.4% of respondents reported their organizations were extremely or very prepared to comply in the recent poll, rising slightly from October 2016 (11%) and March 2016 (7.9 %).
“Continuing focus on the fast-approaching revenue recognition standard has likely limited the attention placed on the new leasing guidance,” said James Barker, senior consultation partner for lease accounting in the national office of Deloitte & Touche LLP. “We are also starting to hear from companies with real concerns about their ability to implement the new leasing standard by the required adoption date. These concerns largely relate to perceived systems needs and limited resources to implement systems.”
Just 7.8% of corporate leaders expect their organizations to early adopt the new lease accounting standards, a drop from March 2016 (10.8%). Similarly the number of executives who said lease accounting implementation would be easy lowered to 11.4% from March 2016 (17%).
According to a recent
Although the beginning date for compliance with the new Financial Accounting Standards Board's (FASB) and International Accounting Standards Board's (IASB) new lease accounting standards is still approximately 18 months away for U.S.-based public companies, 47.1% of high-level corporate executives are concerned about their organizations' ability to implement on time.
The Poll
From a sector perspective, corporate leader concerns about implementing lease accounting standards on time were highest in: oil and gas (56.2%); consumer products (55.9%); retail, wholesale and distribution (54.3%); health care providers (53.6%); and media and entertainment (52.6%).
“The large number of executive leaders still expressing concern regarding lease accounting implementation halfway into the three-year preparation window is indicative of the complexity of the issue,” said Sean Torr,
Corporate Preparation
Executives showed modest improvement on the preparation front. In
“Continuing focus on the fast-approaching revenue recognition standard has likely limited the attention placed on the new leasing guidance,” said James Barker, senior consultation partner for lease accounting in the national office of
Just 7.8% of corporate leaders expect their organizations to early adopt the new lease accounting standards, a drop from March 2016 (10.8%). Similarly the number of executives who said lease accounting implementation would be easy lowered to 11.4% from March 2016 (17%).
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