Under the new guidance, companies may have to make big changes to processes and the segregation of duties, and will need stronger internal controls to monitor lease activity through the life of leases. Workday Financial Management customers are already covered, because Workday’s Business Process Framework—where all business activity is modeled and governed, is built into the foundation of the application. This will make it easy for companies to create and modify processes and routing to job roles as they make the transition.
Many companies today are managing lease amortization schedules in spreadsheets, increasing the risk for errors and making it difficult to establish effective controls. Workday Financial Management will support the full lease accounting process in one system, including the initial recognition of lease assets and lease liabilities, automatic generation of supplier invoices for lease payments, expense recognition, lease asset amortization, and lease liability amortization. Finance teams can reconcile amortization schedules back to balance sheet entries in the same system, making it much easier to comply with the new lease accounting standards.
As with the new revenue recognition standard, it’s important that companies begin preparing now. Keep a look out for more from us on the new leasing accounting standards in the months ahead.