{"id":1939,"date":"2019-09-17T08:00:35","date_gmt":"2019-09-17T12:00:35","guid":{"rendered":"https:\/\/visuallease.com\/?p=1939"},"modified":"2021-03-25T09:32:57","modified_gmt":"2021-03-25T13:32:57","slug":"lease-accounting-auditing-risks-multiply-without-software","status":"publish","type":"post","link":"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/","title":{"rendered":"Lease accounting auditing risks multiply without software"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Exposure_of_lease_accounting_auditing_risks\" >Exposure of lease accounting auditing risks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Underestimating_lease_complexity\" >Underestimating lease complexity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#No_audit_trail_for_tracking_change_management\" >No audit trail for tracking change management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Lack_of_controls\" >Lack of controls<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#No_one_place_for_your_data\" >No one place for your data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Lack_of_notifications_for_important_events\" >Lack of notifications for important events<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Lack_of_visibility_into_location-level_costs\" >Lack of visibility into location-level costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/visuallease.com\/lease-accounting-auditing-risks-multiply-without-software\/#Human_error_and_incomplete_data\" >Human error and incomplete data<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\"><img decoding=\"async\" class=\"wp-image-1940 size-large aligncenter\" src=\"https:\/\/visuallease.com\/wp-content\/uploads\/2019\/09\/shutterstock_370390022-1024x681.jpg\" alt=\"\" width=\"1024\" height=\"681\" srcset=\"https:\/\/visuallease.com\/wp-content\/uploads\/2019\/09\/shutterstock_370390022-1024x681.jpg 1024w, https:\/\/visuallease.com\/wp-content\/uploads\/2019\/09\/shutterstock_370390022-300x200.jpg 300w, https:\/\/visuallease.com\/wp-content\/uploads\/2019\/09\/shutterstock_370390022-768x511.jpg 768w, https:\/\/visuallease.com\/wp-content\/uploads\/2019\/09\/shutterstock_370390022-900x600.jpg 900w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the new FASB\/IFRS lease accounting standards, significantly more assets and liabilities must now appear on the balance sheet. Yet, some businesses still aren\u2019t using <\/span><a href=\"https:\/\/visuallease.com\/software\/lease-accounting\/\"><span style=\"font-weight: 400;\">lease accounting software<\/span><\/a><span style=\"font-weight: 400;\"> to help with the complex task of managing their lease portfolios.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What are some of the <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks<\/span><span style=\"font-weight: 400;\"> that arise when you don\u2019t use a software solution?<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Exposure_of_lease_accounting_auditing_risks\"><\/span><span style=\"font-weight: 400;\">Exposure of <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The new standards are designed to expose <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks <\/span><span style=\"font-weight: 400;\">and reveal if an organization lacks the proper checks and balances in their accounting process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">No one wants to find out through an audit that they\u2019ve been doing their lease accounting all wrong. Yet that is exactly what can happen when you do your accounting manually or with a spreadsheet application.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">The truth is, the risk of failing an audit is greatly increased when you don\u2019t have a software system in place that mirrors your lease accounting policies and procedures.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Underestimating_lease_complexity\"><\/span><span style=\"font-weight: 400;\">Underestimating lease complexity<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">People often underestimate the difficulty of accounting for all their lease assets and liabilities. Even for businesses with a relatively small lease portfolio, facilities and equipment are the second biggest cost (behind the #1 cost, people).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">Once you start breaking down a portfolio and digging into the details, you may be surprised at the complexity of the leases and the costs associated with them. Not only are there different classes of assets (such as real estate and equipment) and different types of leases (operating and finance), but all are calculated differently.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">For example, real estate lease are very complex transactions, with common area charges and other details that must be reported accurately. Leasing office space might require complex calculations for how the building\u2019s tenants divide costs such as:<\/span><\/p>\n<ul>\n<li>Cleaning the lobby and other shared areas<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Trash removal<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Parking lot maintenance<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Lawn\/Landscape care<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">There are many other important lease details that are easy to overlook. For example, you may have some embedded leases that are part of a larger contract, such as an IT support services agreement included in an equipment leasing contract.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">Unlike manual accounting, Visual Lease puts a proven process in place for capturing all these pertinent data points.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_audit_trail_for_tracking_change_management\"><\/span><span style=\"font-weight: 400;\">No audit trail for tracking change management<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When you use a spreadsheet or calculators, there is no audit trail to help you track your change management process. That means you have no proof you\u2019ve followed the policies and procedures you\u2019ve put in place for change management, approval flows, and other lease accounting requirements.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">For example, lease data changes need to be recorded and tracked as they happen, so that if an audit takes place \u2014 for a credit evaluation, a bank loan, shareholder reporting, or other purposes \u2014 you can prove that everything is in order and up to date.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">Visual Lease reduces <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks<\/span><span style=\"font-weight: 400;\"> by providing an audit trail that thoroughly documents your change management process, including:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">\u00a0<\/span>Who made a change<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The date and time the change was made<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Whether approval was needed for the change and, if so, who approved it<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If the change was required due to a data error or to show a change in lease management<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">(Read more about changes to leases in our <\/span><a href=\"https:\/\/visuallease.com\/6-frequently-asked-questions-about-lease-accounting-remeasurements\/\"><span style=\"font-weight: 400;\">blog on lease accounting remeasurements<\/span><\/a><span style=\"font-weight: 400;\">.)\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lack_of_controls\"><\/span><span style=\"font-weight: 400;\">Lack of controls<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In lease accounting, everything is about controls and making sure you are consistent across your accounting process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But with a spreadsheet or manual accounting process, there is not much you can do to control who can see the data or make changes to your lease records, which exposes your business to <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Visual Lease software helps to keep your data secure with password protection and a wide range of authentication features you can use to manage access, user roles, and permissions for your lease accounting system.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">(Read more about <\/span><a rel=\"canonical\" href=\"https:\/\/visuallease.com\/lease-accounting-software-comparison-data-security-features\/\"><span style=\"font-weight: 400;\">lease accounting data security features<\/span><\/a><span style=\"font-weight: 400;\">.)\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_one_place_for_your_data\"><\/span><span style=\"font-weight: 400;\">No one place for your data<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you\u2019re using a spreadsheet or calculators and manually entering the information in your balance sheet, you lack an important resource: a single data repository that includes all the supporting evidence behind it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">With Visual Lease, you get a single-source repository that brings all your lease data together for easier tracking, change management, reporting, and verification should an audit need to be done.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lack_of_notifications_for_important_events\"><\/span><span style=\"font-weight: 400;\">Lack of notifications for important events<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When you\u2019re doing your lease accounting manually, you don\u2019t have the ability to flag events and set notifications for important dates and events, such as:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">\u00a0<\/span>Lease renewals<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">End dates<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Payment increases<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Opt in\/out deadlines<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">With Visual Lease software, you can have the system alert you to important dates so you can stay on top of lease changes that have an impact on your liabilities.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lack_of_visibility_into_location-level_costs\"><\/span><span style=\"font-weight: 400;\">Lack of visibility into location-level costs<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Without software for administering and maintaining your lease portfolio, you may not be fully aware of the cost of leases at the location level.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, one customer had a warehouse that was paying $1,600 a month to lease a forklift \u2014 and had been doing so for eight years! For that amount of money, the company could have purchased the equipment several times over or leased a newer forklift with all the latest features.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Visual Lease provides visibility into these types of expenses so you can identify business risks as well as <\/span><span style=\"font-weight: 400;\">leasing accounting auditing risks<\/span><span style=\"font-weight: 400;\">. You can also set up the system to alert you to lease renewals and remind you to review the costs, to see if they still make good business sense.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Human_error_and_incomplete_data\"><\/span><span style=\"font-weight: 400;\">Human error and incomplete data<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Recording all your lease data and doing calculations by hand is not only difficult and time consuming \u2014 the chance of human error increases your <\/span><span style=\"font-weight: 400;\">lease accounting auditing risks<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A single typo or a misplaced decimal point can throw everything off. If you do business in other countries and must deal with multiple currencies, having to figure out the calculations on your own is an added challenge, with added risk of human error.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition, with the new lease accounting standards, more than 40 different types of data must be tracked to do the required calculations. Unless you have a very simple lease portfolio, how do you know which fields you need?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Visual Lease software guides you through the process using tried and true calculations that have been validated by more than 700 customers and our industry-leading accounting partners.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Plus, having already helped public companies successfully transition to the new FASB\/IFRS standards, Visual Lease has best practices built into the solution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">To learn more about how the Visual Lease platform can help you avoid common <\/span><span style=\"font-weight: 400;\">lease accounting auditing<\/span> <span style=\"font-weight: 400;\">risks<\/span><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/visuallease.com\/visual-lease-software\/\"><span style=\"font-weight: 400;\">give us a call<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the new FASB\/IFRS lease accounting standards, significantly more assets and liabilities must now appear on the balance sheet. Yet, some businesses still aren\u2019t using lease accounting software to help&#8230;<\/p>\n","protected":false},"author":3,"featured_media":1940,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[109],"tags":[185,196,79],"company_size":[],"company_portfolio_size":[],"company_industry":[],"case_study_topic":[],"class_list":["post-1939","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lease-administration","tag-asc-842","tag-ifrs-15","tag-real-estate"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/1939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/comments?post=1939"}],"version-history":[{"count":0,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/1939\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media\/1940"}],"wp:attachment":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media?parent=1939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/categories?post=1939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/tags?post=1939"},{"taxonomy":"company_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_size?post=1939"},{"taxonomy":"company_portfolio_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_portfolio_size?post=1939"},{"taxonomy":"company_industry","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_industry?post=1939"},{"taxonomy":"case_study_topic","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/case_study_topic?post=1939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}