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New Lease Accounting Standards: GASB 87 and SFFAS 54
Government lease accounting transformation
New lease accounting standards for state/local governments and public higher education institutions regulated by GASB (GASB 87) and for the federal government (SFFAS 54).
Start early. Start now. The journey towards GASB 87 and SFFAS 54 compliance.
With pressing timelines, the countdown has already begun. Deloitte has extensive experience working with commercial organizations to help them prepare and comply with new lease accounting regulations. We can collaborate with your organization to incorporate lessons learned when navigating your transformation. We think about early preparation in the following key areas:
● Historical lease disclosures are potentially not complete
● Review of all general ledger accounts with lease related transactions
● Review of recurring monthly payments and meet with departments of related contracts to understand whether specific assets are being used to provide services
● Expect to gather additional data to comply with GASB 87 and SFFAS 54 accounting and disclosure requirements
● Detailed data points for each lease will be necessary to apply the new standard to a population of leases
● Expect internal control changes that are likely to impact business processes outside of the accounting and finance functions
● Identifying and defining controls around lease reassessment events can be challenging
● Many solutions are not designed to address specific aspects of the standards
● The timeline to implement solutions is likely longer than expected, and resource constraints are likely as the effective date draws near
● Machine learning can assist in reading contracts but is not a complete substitute for review by skilled professionals
● While lease accounting is a compliance effort, seek opportunities to improve other lease-related processes such as lease administration
● Engage those outside of the accounting function in vendor identification and selection process
Implementing the new government lease accounting standards
Start now! Allow us to collaborate with you to plan ahead for the new challenges and managing the processes of complying with the leasing accounting changes. Deloitte stands ready to advise and help design an implementation strategy best suited to your organization. We can tailor our services to directly meet your unique organizational structure.
The Deloitte Difference: End-to-end lease standard implementation approach
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Assessment
● Obtain an understanding of current lease processes, procedures, and controls
● Assist in developing a tailored, entity-specific roadmap outlining the timeline and work plan for adoption of the new lease accounting standard
● Provide hypothetical calculations that illustrate financial impact or scenarios to management
● Assist in developing plans for lease data capture, storage, and maintenance
Design
● Provide advice and recommendations on management's business requirements and for both potential interim and long-term lease accounting technology solutions
● Draft revised processes and internal controls documentation
● Providing draft accounting position papers that describe critical accounting issues related to contracts under GASB 87 and SFFAS 54 and potential alternatives for management’s consideration
● Assist management in developing its plan for data migration and abstraction
Implementation
● Perform abstraction of lease contracts and assist in migrating data from existing systems and spreadsheets
● Prepare initial drafts of documents used to support any implementation efforts, including the generation of accounting records
● Implement the company's selected lease accounting technology
Provide draft accounting policies and GASB 87 and SFFAS 54 transition disclosures
Deloitte has a unique perspective of financial processes and technology across government and higher education institutions. Connect to our subject matter leaders who can collaborate with you to plan and leverage leading practices for managing the new leasing standard. Let’s work together to proactively address concerns and challenges while also looking at opportunities for program and data enhancement. Contact us today.
Get in touch
Christopher (Chris) Stewart
Government & Public Services (GPS) Controllership, Accounting, & Reporting Offering Leader
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