Outsourcing Your Lease Accounting: 4 Best Practices to Consider

by | Oct 20, 2023

Businesses are busy. With limited time and resources, and not enough people on staff, it may be time to pass the task of maintaining compliance under the lease accounting standards on to an accountant or consulting firm.

Working with an accountant or CPA has numerous benefits – it saves time and grants access to expertise that may not be in-house. However, a “set-it-and-forget-it” approach to outsourcing may lull organizations into a false sense of security. As experts in lease accounting, our advice is to keep some control of your lease accounting processes.

While the CPA or accounting firm can do most of the heavy lifting, the business should maintain the ability to:

  • Pull reporting on an as-needed basis
  • Have insights into how the standards apply to your company
  • Leverage the standards to improve operational efficiency outside of the accounting department

After compliance, companies can use the momentum gained from the transition project to determine what subsequent lease accounting will look like.

Four best practices to implement if you’re thinking about outsourcing your lease accounting:

1) Purchase a lease accounting solution

There’s nothing wrong with hiring a CPA firm to assist with ongoing compliance. To ensure the software used for lease accounting is the best fit for your organization, purchase it yourself and grant them access.

A one-size-fits-all approach to lease accounting is not the answer. Minimize disruptions to the flow of business by matching your preferred software with the expertise of the outsourced auditors.

2) Get direct access to reports and lease documents

When using software, the team can pull needed reports in minutes. Not only does this save time, but it enables other departments, such as procurement or legal, to access contracts and other critical documents related to the leases.

3) Ensure internal employees understand the standards

Outsourcing lease accounting is about more than just ongoing compliance. It’s important to have overall lease knowledge:

  • Dates
  • Amounts owed
  • Efficiencies in auditing and reporting
  • No duplication

Making it through the initial transition was the most difficult part of switching to the new standards. However, challenges are still involved in the post-transition process. While businesses can rely on an external firm for support, it’s smart art to develop internal talent that sets you up for success in the long run.

4) Small companies still need lease accounting

Company size doesn’t drive the need for a software solution. It’s the number and complexity of a company’s leases that dictate the need. Since most consulting firms use software to manage lease accounting needs, you should too.

To help in your decision-making, review our step-by-step lease accounting transition guide. It’ll give you further insight and help take the guesswork out of transitioning to the new lease accounting rules.

ASC 842 Lease Accounting Guide

ASC 842 Lease Accounting Guide