Lease accounting is simplified by those working in it becoming familiar with its accounting standards, including the newly adopted ASC 842 that makes leases more visible among the assets of a balance sheet.
Another way of simplifying lease accounting is using lease accounting software.
Lease accounting software has made it easier to comply with the new accounting standard and all aspects of the finance side of property leasing.
The software will mean that you can make sure you are classifying leases correctly as a computer user involved in accounting and then guarantee compliance with the set accountancy standards. The financial penalties and implications are high for non-compliance. Jobs and reputations may be at stake too for getting it wrong. This is far less likely when software is used to guide accounts workers and finance managers through the process.
Compliance is not just about showing the lease on the balance sheet but at the correct figure because, otherwise, we defeat the object when it comes to not misleading the investor. Shareholders will want to know that figures are being accounted for accurately when making their decisions about buying or selling stock in a company.
The software will provide those accurate records of the active leases within a company’s portfolio. This will then provide a comprehensive view of what the obligations are in respect of those leases. These obligations relate to leasing terms, renewal dates, and expenditure.
Is The Software Easy to Use?
Lease accounting software is quick to set up in terms of ledgers, calendars, and policies. Deadlines in respect of leases will need to be kept a track of to ensure that money is collected on time and reporting deadlines will apply too. The amount and dates are the two important things to have correct with any accounting system. Software and its calendars can guide us into that.
Another thing with accountancy is that it is also about placing figures in the right columns and ledgers and software helps with that too. Every debit for instance will have a corresponding credit under a double-entry book-keeping system. Leases now need to show as assets on the balance sheet.
Be Audit Ready
To be audit-ready, we will use software that will achieve significant automation in the accounting process. The software will mean that figures have been given totals and worked out for us in respect of them appearing on the balance sheet.
There will be ready-to-use reports that can be tapped into with lease accounting software packages. These will prove useful to an auditor as well as managers.
Lease accounting software is an auditor’s friend because it will also make their job easier, and they will have that confidence in the leases more likely being accounted for correctly.
Can Software Be Leased?
The answer to this question is that software can be leased just as assets such as property can. As computer equipment or hardware can be leased, so too can software. Terms can be flexible and include buyout options. It is good to know that a company can see how they find software before deciding to run with it long term.
The features of such software indicate that it will prove to be an asset in respect of managing lease accounting more effectively than without its help. It is what makes compliance easier and maintains accuracy. This is as well as keeping track of what is going on with leases and pleasing the auditor when the weekly, monthly, or yearly reports are produced in respect of the leases held by a company at any one time.
We can then see just how software can be effective to the lives of finance staff working with leases. It makes sense to have software now or to update existing software that is no longer effective. Compliance becomes easier when software is guiding us to the result. That is the inclusion of leases on the balance sheet, whether a company is public or now private.