Adopting an ASC-842 lease accounting solution is a critical step for any organization managing leases. The standard requires precise calculations, detailed reporting, and thorough compliance efforts—but not all systems are built to meet these needs. If your current solution isn’t up to par, it could be causing more harm than good.
Here are eight signs that your ASC-842 solution might not be cutting it:
1. Frequent Errors in Lease Calculations
Do you find mistakes in your lease liability, right-of-use (ROU) asset calculations, or amortization schedules? These errors are a telltale sign that your solution isn’t equipped to handle the complexities of ASC-842. Inaccurate calculations can lead to flawed financial statements and compliance risks, undermining trust with auditors and stakeholders.
2. Data Silos and Inefficient Collaboration
If lease data is spread across multiple systems or departments—such as accounting, real estate, and legal—it’s a recipe for inefficiency. Fragmented data leads to redundant manual work, delayed reporting, and higher chances of discrepancies. A strong ASC-842 solution should centralize all lease data, creating a single source of truth and simplifying collaboration.
3. Difficulty Handling Lease Modifications
Lease changes are inevitable, whether it’s an extension, early termination, or rent adjustment. If your solution struggles to handle these modifications or requires excessive manual intervention to remeasure leases, it’s a clear sign that the system lacks the flexibility or scalability needed to meet ASC-842’s requirements.
4. Time-Consuming Manual Processes
Are your teams spending hours manually inputting, reconciling, or reviewing lease data? A robust ASC-842 solution should automate tedious tasks like lease abstraction, remeasurements, and reporting. Manual processes not only waste time but also increase the risk of human error.
5. Limited Reporting Capabilities
ASC-842 requires detailed reporting to support audit trails and ensure compliance. If your solution doesn’t offer robust reporting features—such as multi-year schedules, sensitivity analysis, or built-in audit tools—you’re likely creating extra work for your team and putting your organization at risk during audits.
6. Lack of Integration with Other Systems
A good ASC-842 solution should integrate seamlessly with your accounting software, ERP, and other essential systems. If your solution requires you to manually transfer data between platforms, it’s adding unnecessary complexity to your operations and increasing the likelihood of discrepancies.
7. Missed Deadlines or Compliance Risks
Missing critical deadlines for reporting, lease remeasurements, or rent payments is a major red flag. These oversights can lead to financial penalties, failed audits, and a loss of trust from stakeholders. If your ASC-842 solution doesn’t have built-in alerts or workflows to help you stay on track, it’s not doing its job.
8. Inability to Handle Complex Lease Portfolios
If your organization operates a diverse or multi-location lease portfolio, your ASC-842 solution should be able to handle complexities like international leases, variable rent structures, or multi-entity consolidations. A solution that’s too basic for your needs can cause inefficiencies, errors, and missed opportunities for optimization.
Is It Time for a Change?
If any of these signs sound familiar, it might be time to evaluate your ASC-842 solution. A strong system should save your team time, reduce compliance risks, and provide the insights you need to manage your leases effectively.
At Property Works, we specialize in lease administration and helping businesses like yours maximize their ROI. Whether you’re looking for a new solution or need guidance on optimizing your current one, we’re here to help.
Reach out today to learn more about how we can support your lease administration efforts—or explore our tools to see how much more your lease management process could deliver.
