{"id":7942,"date":"2023-04-24T08:44:59","date_gmt":"2023-04-24T12:44:59","guid":{"rendered":"https:\/\/visuallease.com\/?p=7942"},"modified":"2024-08-07T14:02:56","modified_gmt":"2024-08-07T18:02:56","slug":"mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance","status":"publish","type":"post","link":"https:\/\/visuallease.com\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/","title":{"rendered":"Mastering Lease Accounting Internal Controls: Part 1"},"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\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#Key_Categories_for_Lease_Accounting_Internal_Controls\" >Key Categories for Lease Accounting Internal Controls<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/visuallease.com\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#Transition-related_controls\" >Transition-related controls<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/visuallease.com\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#Financial_Reporting_Controls\" >Financial Reporting Controls<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/visuallease.com\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#Activity-related_controls\" >Activity-related controls<\/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\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#IT_General_Controls\" >IT General Controls<\/a><\/li><\/ul><\/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\/mastering-lease-accounting-internal-controls-part-1-unveiling-the-key-categories-for-compliance\/#Learn_More_about_Lease_Accounting_Internal_Controls\" >Learn More about Lease Accounting Internal Controls<\/a><\/li><\/ul><\/nav><\/div>\n<p style=\"text-align: center;\"><em><span class=\"TrackChangeTextInsertion TrackedChange SCXW3748127 BCX0\"><span class=\"TextRun SCXW3748127 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW3748127 BCX0\" data-ccp-parastyle=\"Subtitle\" data-wp-editing=\"1\"><img decoding=\"async\" class=\"alignnone wp-image-7943 size-full\" src=\"https:\/\/visuallease.com\/wp-content\/uploads\/2023\/04\/Mastering-Lease-Accoutning-Part1.jpg\" alt=\"\" width=\"1500\" height=\"784\" srcset=\"https:\/\/visuallease.com\/wp-content\/uploads\/2023\/04\/Mastering-Lease-Accoutning-Part1.jpg 1500w, https:\/\/visuallease.com\/wp-content\/uploads\/2023\/04\/Mastering-Lease-Accoutning-Part1-300x157.jpg 300w, https:\/\/visuallease.com\/wp-content\/uploads\/2023\/04\/Mastering-Lease-Accoutning-Part1-1024x535.jpg 1024w, https:\/\/visuallease.com\/wp-content\/uploads\/2023\/04\/Mastering-Lease-Accoutning-Part1-768x401.jpg 768w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/span><\/span><\/span><\/em><\/p>\n<p><i>This is part I of our Mastering Lease Accounting Compliance series. If you\u2019re looking for part II, you can read it <a href=\"https:\/\/visuallease.com\/mastering-lease-accounting-internal-controls-part-2-top-7-control-activities-and-how-technology-can-help\/\">here<\/a>.<\/i><\/p>\n<p>Lease accounting standards such as <a href=\"https:\/\/visuallease.com\/compliance\/asc-842\/\">ASC842<\/a> and <a href=\"https:\/\/visuallease.com\/compliance\/ifrs-16\/\">IFRS16<\/a> have significantly changed companies&#8217; financial reporting requirements. These standards require companies to be more diligent in their financial reporting and lease management processes. The implementation of these standards requires a series of controls to ensure accuracy and compliance.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key_Categories_for_Lease_Accounting_Internal_Controls\"><\/span>Key Categories for Lease Accounting Internal Controls<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/visuallease.com\/solutions\/controls\/\" target=\"_blank\" rel=\"noopener\">Lease accounting internal controls<\/a> fall into four main categories: <b>Transition-related Controls<\/b>, <b>Financial Reporting Controls<\/b>, <b>Activity-related Controls<\/b>, and <b>IT General Controls<\/b>.<\/p>\n<ol>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Transition-related_controls\"><\/span>Transition-related controls<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p> are short-term controls that focus on the transition period when implementing the new lease accounting standards. These controls include ensuring accurate lease listings during the transition, appropriate documentation, and other related processes. It is important not to lose track of these controls, as some of them have ongoing relevance even after the transition period. Some of these controls may become relevant again when companies move across the technology maturity spectrum.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Financial_Reporting_Controls\"><\/span>Financial Reporting Controls<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p> are critical to ensuring that companies comply with the new lease accounting standards. These controls include familiar checklists for disclosure and IFRS16 reporting and existing internal controls for financial reporting. In addition, lease-specific controls such as reconciling lease disclosures with related system reports are essential to ensure accuracy in financial reporting.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Activity-related_controls\"><\/span>Activity-related controls<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p> refer to controls around lease management processes such as lease modifications, lease terminations, and lease renewals. These controls include ensuring that there are appropriate approvals in place for these processes and that lease modifications and renewals are reflected accurately in the company&#8217;s financial statements. Activity-related controls also include lease classification reviews, which ensure that leases are classified correctly as operating or finance leases. This is important because it affects the way leases are recorded in the company&#8217;s financial statements.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"IT_General_Controls\"><\/span>IT General Controls <span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>are controls that ensure the integrity of the company&#8217;s IT systems, data, and processes. These controls include ensuring appropriate access controls, data backups, and data security. IT General Controls are particularly important for lease accounting standards as they involve significant data and calculations.<\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Learn_More_about_Lease_Accounting_Internal_Controls\"><\/span>Learn More about Lease Accounting Internal Controls<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To learn more about lease accounting internal controls \u2013 including the top seven control activities and how technology can help with lease accounting, check out part II of this blog. If you\u2019re looking for reliable lease controls and audit-ready financial reports, learn more about Visual Lease\u2019s <a href=\"https:\/\/visuallease.com\/solutions\/lease-accounting-software\/\">Lease Accounting Solution<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is part I of our Mastering Lease Accounting Compliance series. If you\u2019re looking for part II, you can read it here. Lease accounting standards such as ASC842 and IFRS16&#8230;<\/p>\n","protected":false},"author":2,"featured_media":7943,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[170,109,184],"tags":[284,185,210,215],"company_size":[],"company_portfolio_size":[],"company_industry":[],"case_study_topic":[],"class_list":["post-7942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lease-accounting","category-lease-administration","category-lease-management","tag-asc-840","tag-asc-842","tag-fasb","tag-lease-accounting"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/7942","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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/comments?post=7942"}],"version-history":[{"count":0,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/7942\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media\/7943"}],"wp:attachment":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media?parent=7942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/categories?post=7942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/tags?post=7942"},{"taxonomy":"company_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_size?post=7942"},{"taxonomy":"company_portfolio_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_portfolio_size?post=7942"},{"taxonomy":"company_industry","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_industry?post=7942"},{"taxonomy":"case_study_topic","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/case_study_topic?post=7942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}