New lease accounting rules for US companies a headache, CFOs complain

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Within the last year, a new lease-accounting standard began to take effect for public companies. However, finance chiefs are saying that complying with this standard has been more challenging than expected, according to The Wall Street Journal.

The new standard, made by the Financial Accounting Standards Board, requires companies to report operating leases on their balance sheets to increase transparency for investors and lenders. 

Public companies, the first to transition to the new standard, have complained about the time-consuming process of tracking down lease agreements and contracts that are sometimes scattered across the country and the world.

"Even people in our nursing facilities who need to be focused on patient care had to help us dig up leases," Tom DiVittorio, CFO of Kennett Square, Pa.-based Genesis Healthcare, told the Journal.

Genesis had to track down hundreds of small equipment leases, which took significant time, Mr. DiVittorio said. 

Although the board recently advanced a proposal extending the deadline for private companies to transition to the new standard to fiscal years after Dec. 15, 2020, private companies are watching the transition closely to learn tips from the public ones. 

Mr. DiVittorio said he wished he had found software to accommodate all of Genesis' leases. 

To other companies adapting to the standards he advised: "Learn in Excel what you really need out of software, and go find it."

Read the full report here

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