Are You Ready to Implement the New Accounting Standards?

When the HORNE Public & Middle Market team started writing about the new lease standard and the new revenue recognition standard, the implementation deadlines seemed to be in the distant future. The guidance for the lease standard was just released in February of this year and doesn’t take effect for public companies until 2019 and for private companies until 2020. The revenue recognition standard deadlines are scheduled a year earlier—2018 and 2019 for public and private companies, respectively.

Although the deadlines are several years away, you may need to start benchmarking as early as next year, and your planning should be well underway by now. I’m checking in with you today to see where you are in your preparations.

If your company uses leases to acquire assets without huge cash outlays, to enjoy lower interest rates than is possible with loans, or to reduce the risks of ownership, you may need to re-examine your lease and purchase decisions very soon. In fact, public companies may need to start collecting certain data as early as next year and private companies may need to start no later than 2018 in order to meet the lease standard implementation deadlines.

Your company should also create a plan with regard to the revenue recognition standard. You should start by reviewing the new standard against your customer arrangements to identify areas requiring attention. You’ll need to consider tax implications, other possible impacts on your operations and your IT systems, at the very least. Once you have a snapshot of where you are, you can begin to assess the financial impact the new standard may have on your business and move toward implementation.

You’ll also want to consider the timing of the deadlines for the two standards. Although implementation for revenue recognition is required a year earlier than the lease standard, your work on the two standards will overlap. The worst thing you can do is wait too long and become overloaded with the implementation of both of these comprehensive standards at the last minute.

We have prepared information to help you successfully navigate the changing standards, and I’ll recap them here for your convenience:

New Lease Standard

New Revenue Recognition Standard

Of course, our team is always available to answer questions or to assist you with planning and implementation. Give us a call to discuss your needs.

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