Although the implementation of the lease accounting standard has been delayed a year for non-public companies, it is not too early to begin looking at policies to implement in advance of this new standard.
To ensure effective implementation of this standard, it is critical that organizations maintain established processes to track the inventory of leases.
Documented procedures should address the following:
- Determine which positions/departments have authority to enter into leases on behalf of the organization.
- Establish a point department that is responsible for developing and maintaining a lease inventory list. It would likely be an accounting or legal department.
- Document a timeline for how frequently the point department should be informed of new leases. Depending on an organization’s size, weekly could be sufficient.
- Implement controls to ensure the completeness of the list. These will vary based on the size of an organization and number of leases but could include comparison of vendors on the master lease inventory list to active vendors in the payables system.