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5 steps to start your FASB transition project

Eighty per cent of CFOs say their company has not yet begun preparations to adopt the FASB lease transaction reporting standards that come into force in the next two years. The survey of 2,200 US CFOs found that the the Financial Accounting Standards Board (FASB)'s accounting standards update (ASU), intended to improve financial reporting on leasing transactions, is not a priority for companies, despite the fact that public companies must adopt it by 2019, while all other organisations need to begin adopting it by 2020.

The transition to the new standard involves technology upgrades, staff training and change management, which can all be costly and time-consuming processes. However, few companies have taken the step of assessing the resources required for the project and the fear is that many companies might be underestimating the size and scope of the transition.

How to start your FASB transition project

Some of the steps to implementing a new accounting/reporting standard include:

  1. identify team members and responsibilities for completing the transition to the new standard;
  2. begin or complete new written accounting procedures and policies;
  3. make an inventory of and prioritise any systems changes that might be required;
  4. develop a project plan to address all gaps emanating from the diagnostic work; and
  5. investigate any lease or property management systems that will facilitate adoption.

Transition creates challenges for companies

The survey was developed by Robert Half Management Resources and Protiviti. Chris Wright, of Protiviti, said the scope of the transition is creating challenges for companies: “The new guidance is much more than accounting. It requires systems upgrades, new reporting processes throughout the business and updated training. The transition also necessitates a well-rounded change-management initiative, which is proving to be a massive effort, especially for large companies, and particularly coming on the heels of the adoption of the new revenue recognition standard."

CTMfile take: The main take-away is that companies in the US should start to prepare for the transition to the new lease transaction reporting standards that they will need to start using by 2020 at the latest (2019 for public firms). Now is a good time to begin the diagnostic phase to assess resources needed for the project.

This item appears in the following sections:
Control & Compliance in Operations

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