{"id":618,"date":"2017-11-02T08:00:06","date_gmt":"2017-11-02T08:00:06","guid":{"rendered":"https:\/\/visuallease.com\/?p=618"},"modified":"2025-03-04T12:21:50","modified_gmt":"2025-03-04T16:21:50","slug":"data-collection-tips-for-asc-842-transition-ifrs-16-compliance","status":"publish","type":"post","link":"https:\/\/visuallease.com\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/","title":{"rendered":"Data Collection Tips for ASC 842 Transition &amp; IFRS 16 Compliance"},"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\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#Think_you_have_all_the_data_you_need_for_ASC_842IFRS_16_compliance_Think_again\" >Think you have all the data you need for ASC 842\/IFRS 16 compliance? Think again.<\/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\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#Data_you_may_be_missing_for_ASC_842_transition_or_IFRS_compliance\" >Data you may be missing for ASC 842 transition or IFRS compliance<\/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\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#3_data_collection_steps_that_ensure_complete_and_reliable_data\" >3 data collection steps that ensure complete and reliable data<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/visuallease.com\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#STEP_1_Gather_and_organize_all_relevant_documents\" >STEP 1: Gather and organize all relevant documents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/visuallease.com\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#STEP_2_Collect_the_right_data\" >STEP 2: Collect the right data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/visuallease.com\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#STEP_3_Data_quality_audit\" >STEP 3: Data quality audit<\/a><\/li><\/ul><\/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\/data-collection-tips-for-asc-842-transition-ifrs-16-compliance\/#Dont_put_off_asking_for_help\" >Don\u2019t put off asking for help<\/a><\/li><\/ul><\/nav><\/div>\n<h2><img decoding=\"async\" class=\"aligncenter size-full wp-image-620\" src=\"https:\/\/visuallease.com\/wp-content\/uploads\/2017\/11\/VL_11.02_BlogPost.png\" alt=\"ASC 842 Transition &amp; IFRS 16 Compliance\" width=\"1016\" height=\"350\" srcset=\"https:\/\/visuallease.com\/wp-content\/uploads\/2017\/11\/VL_11.02_BlogPost.png 1016w, https:\/\/visuallease.com\/wp-content\/uploads\/2017\/11\/VL_11.02_BlogPost-300x103.png 300w, https:\/\/visuallease.com\/wp-content\/uploads\/2017\/11\/VL_11.02_BlogPost-768x265.png 768w\" sizes=\"(max-width: 1016px) 100vw, 1016px\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Think_you_have_all_the_data_you_need_for_ASC_842IFRS_16_compliance_Think_again\"><\/span>Think you have all the data you need for ASC 842\/IFRS 16 compliance? Think again.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Extracting data for <a href=\"https:\/\/visuallease.com\/compliance\/asc-842\/\">ASC 842 transition<\/a> or <a href=\"https:\/\/visuallease.com\/compliance\/ifrs-16\/\">IFRS 16 compliance<\/a> is more than a numbers game. In addition to the dates and payment amounts associated with your leases, there are more complex quantitative data points that will need to be captured from lease documents. Some will need to be calculated based on specific lease terms, such as breakdowns of lump-sum rent payments and CPI increases.<!--more--><\/p>\n<p>While the main source of data will be the leases themselves, there are also qualitative data points that won\u2019t be found in the lease documents, but instead might come from your real estate team or lease administration partners. You may also need help from outside resources to understand the legal and accounting implications of all lease conditions.<\/p>\n<p>The complexity of capturing and aggregating data for ASC 842 or IFRS 16 compliance is exacerbated when you\u2019re not starting from a single source of truth. Before the new lease standards were announced, many organizations had no central repository for lease information. Now that lease data is moving onto the balance sheet, it\u2019s essential that you collect the right data and ultimately gain more visibility about your leases.<\/p>\n<p>Keep reading to learn what you may be overlooking, as well as the steps to improve the speed and quality of your data collection efforts for ASC 842 or IFRS 16 compliance.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Data_you_may_be_missing_for_ASC_842_transition_or_IFRS_compliance\"><\/span>Data you may be missing for ASC 842 transition or IFRS compliance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In most organizations, the accounting teams are driving data collection for ASC 842 or IFRS 16 compliance. The problem is, your accounting managers are focused on the numbers and are not lease experts. So, there are going to be lease terms they won\u2019t understand what to do with, and data they won\u2019t realize they need to capture.<\/p>\n<p>These are just a couple of examples:<\/p>\n<p><strong>Lump sum rent payments:<\/strong> it\u2019s not enough to capture an all-inclusive monthly payment amount. That needs to be broken down to show what portion is intended as base rent, as well as portions for taxes, insurance and CAM expenses. That detail is not likely to be found in the lease.<\/p>\n<p><strong>Intentions:<\/strong> If a lease includes an option to purchase at the end, you need to find out if your business intends to exercise that option. Similarly, you need to know if the business may be planning to end a lease early (if you have an office that\u2019s moving to a new building, for example). These intentions must be identified because they now impact the lease assets and liabilities you\u2019ll need to show on the balance sheet for ASC 842 or IFRS 16 compliance.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"3_data_collection_steps_that_ensure_complete_and_reliable_data\"><\/span>3 data collection steps that ensure complete and reliable data<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To avoid overlooking important data, which can undermine your compliance timeline and the accuracy of your reporting, follow these data collection steps.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"STEP_1_Gather_and_organize_all_relevant_documents\"><\/span>STEP 1: Gather and organize all relevant documents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Simply locating all your lease documents are can be a major challenge for a global organization with hundreds or thousands of leases. You\u2019ll need a strategy for uncovering all records and possibly a mandate from upper management to help you get cooperation from everyone.<\/p>\n<p>Learn more: <a href=\"https:\/\/visuallease.com\/fasb-lease-accounting-changes-how-to-assemble-your-readiness-team\/\">FASB Lease Accounting Changes: How to Assemble Your Readiness Team<\/a><\/p>\n<p>For your most complex leases (typically property leases), you\u2019ll need to gather multiple documents, including addendums and commencement letters, in addition to the master lease. Before beginning to extract data, make sure you\u2019ve considered the entire scope of documents associated with every lease and have the most up-to-date and accurate records. You may need help understanding the links between the various documents, so you can tell which include the relevant data.<\/p>\n<p><strong>TIP<\/strong>: If you\u2019re missing amendments or other records, lessors may be able to help (they are gathering the same data for ASC 842\/IFRS 16 compliance).<\/p>\n<p>Another source of data may prove challenging for accounting teams when it comes to the ASC 842 transition and IFRS 16 compliance: <strong>embedded leases<\/strong> within service contracts. If an agreement includes an implicit or explicit asset that you control the use of, such as equipment or vehicles, that may be considered a lease. You\u2019ll need to collect any contracts that might have embedded leases, and also devise policies to help those extracting data to decide what constitutes a lease for ASC 842 or IFRS 16 compliance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"STEP_2_Collect_the_right_data\"><\/span>STEP 2: Collect the right data<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The last thing you want to do is spend lots of time and resources pouring through lease documents, then find out you missed critical information and be forced to go through them again. Get it right the first time with these tips.<\/p>\n<p><strong>Understand lease terms<\/strong> well enough to extract the relevant data. For example, there may be different ways to calculate payments that are subject to CPI increases, and a close examination of the lease terms is needed to make sure the amounts are correct.<\/p>\n<p><strong>Be smart about using automated abstraction tools.<\/strong> If humans have trouble understanding lease terms, then AI\/machine learning software will also. Automated tools that use optical character recognition (OCR) to recognize words can\u2019t either- they can only extract simple terms. These tools can speed up the process for the easy data, but you\u2019ll need experts to extract and validate complex terms.<\/p>\n<p>Learn more: <a href=\"https:\/\/visuallease.com\/can-you-trust-ai-for-lease-abstraction\/\">Can You Trust Artificial Intelligence for Lease Abstraction?<\/a><\/p>\n<p><strong>Knowing what to extract is just the beginning.<\/strong> You\u2019ll need to make decisions about how to categorize certain terms. With complex leases (again, your real estate leases) there may be terms that are difficult to put into buckets. Turn to resources that can help you understand the legal and accounting implications of all lease conditions. Your technology vendor and accounting advisory partner should be able to help.<\/p>\n<p><strong>Get data from your business.<\/strong> Certain qualitative data, especially about your intentions around lease options and obligations, won\u2019t be in the lease documents. That\u2019s also true of leased asset details such as physical location and assigned department. You\u2019ll need to turn to your lease administrators and those using the assets to collect this information.<\/p>\n<p><strong>Don\u2019t forget about data for ongoing lease management.<\/strong> In the rush for ASC 842\/IFRS 16 compliance, you may be tempted to collect only what you need for performing calculations. If you do this, you\u2019re overlooking the benefit you stand to gain from this process beyond merely being compliant. Having all your lease data centrally located and easily accessible provides visibility into your leases that you can use to reduce costs and get better value from your property and other assets.<\/p>\n<p>Gather the data for <a href=\"https:\/\/visuallease.com\/solutions\/lease-management-software\/\">lease management<\/a> as a second layer (or have two teams working concurrently) if you\u2019re worried about meeting the ASC 842\/IFRS 16 compliance deadline.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"STEP_3_Data_quality_audit\"><\/span>STEP 3: Data quality audit<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Your data collection effort needs to be both complete and accurate to meet your goals for the ASC 842 transition or IFRS 16 compliance. Errors can happen for many reasons:<\/p>\n<ul>\n<li>Manual data entry mistakes (\u201cfat finger\u201d errors)<\/li>\n<li>Misunderstandings about lease terms<\/li>\n<li>Data that doesn\u2019t import correctly (TIP: be sure your lease accounting system will alert you about data that fails to sync or assign)<\/li>\n<li>Aggregation issues when the same data from multiple systems doesn\u2019t match<\/li>\n<\/ul>\n<p>Those errors add up to reporting results that don\u2019t make sense. You don\u2019t want those mistakes showing up as you get close to your adoption date for the new lease standard. That\u2019s why you need quality checks throughout the data collection process.<\/p>\n<p><strong>Spot checks.<\/strong> As you bring data into your repository or lease accounting database, conduct spot audits regularly. For example, have someone look at some of your most complex leases and verify that the data in the system is correct, especially items like renewals and increases.<\/p>\n<p><strong>Validate data against your assumptions.<\/strong> As you reach milestones, roll up your data, run reports and have your leadership review your findings to see if the numbers feel right. If something jumps out as being way out of line, that\u2019s the time to go back and look for incorrect data that could be impacting your calculations.<\/p>\n<p><strong>TIP:<\/strong> Your lease accounting software should provide the ad-hoc and drill-down reporting flexibility to slice and dice data as needed to perform validation checks.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Dont_put_off_asking_for_help\"><\/span>Don\u2019t put off asking for help<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here\u2019s our last bit of advice and it\u2019s important: if you know you\u2019ll need help with any aspect of the ASC 842 transition or IFRS compliance, now is the time to engage the experts. Get your questions answered, get resources for data collection, and choose your lease accounting system as soon as possible. As the deadline nears, it\u2019s likely you\u2019ll wait longer and even pay more for the limited pool of expertise available.<\/p>\n<p>Learn more: <a href=\"https:\/\/visuallease.com\/start-now-to-spend-less-on-fasb-iasb-lease-accounting-changes\/\">Start Now to Spend Less on FASB &amp; IASB Lease Accounting Changes<\/a><\/p>\n<p>Don\u2019t hesitate to <a href=\"https:\/\/visuallease.com\/visual-lease-software\/\">reach out to us<\/a> at Visual Lease. We\u2019re lease experts and we\u2019re here to help you through your IFRS 16 or ASC 842 transition.<\/p>\n<p>Attending the CoreNet Global Summit 2017 Nov 5 &#8211; 7 in Seattle? See Visual Lease in action at Booth #722.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Think you have all the data you need for ASC 842\/IFRS 16 compliance? Think again. Extracting data for ASC 842 transition or IFRS 16 compliance is more than a numbers&#8230;<\/p>\n","protected":false},"author":3,"featured_media":620,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[170],"tags":[185,196],"company_size":[],"company_portfolio_size":[],"company_industry":[],"case_study_topic":[],"class_list":["post-618","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lease-accounting","tag-asc-842","tag-ifrs-15"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/618","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=618"}],"version-history":[{"count":0,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/618\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media\/620"}],"wp:attachment":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media?parent=618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/categories?post=618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/tags?post=618"},{"taxonomy":"company_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_size?post=618"},{"taxonomy":"company_portfolio_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_portfolio_size?post=618"},{"taxonomy":"company_industry","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_industry?post=618"},{"taxonomy":"case_study_topic","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/case_study_topic?post=618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}