Blythe Global Advisors Says Delaying implementation of the New Lease Accounting Standard Risks Significant Consequences to Financial Results and Stakeholder Confidence.
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Blythe Global Advisors Says Delaying implementation of the New Lease Accounting Standard Risks Significant Consequences to Financial Results and Stakeholder Confidence.
Blythe Global Advisors, a leading Orange County full-service accounting advisory firm, is in the forefront of helping companies implement the new lease accounting rule. With multiple engagements under its belt, Marc Blythe, president of Blythe Global Advisors, is concerned that companies are risking significant unintended consequences to financial results by not restructuring leases quickly enough to ensure they continue to support company goals.
The central tenet of the new lease accounting rule requiring that substantially all leases be recorded on the balance sheet means businesses will need to revamp how they negotiate leases and how they report them. More management judgments will be required to arrive at accurate values of every lease’s asset and liability and, again, more detail as to how numbers were arrived at. When audit firms enter the picture, the opportunity to structure leases that optimally support company goals will have passed.
In Marc’s assessment, delaying implementation will make it difficult to determine the impact on primary financial metrics or to communicate the company’s anticipated value to prospective buyers, bankers, investors, etc. – making the barriers to entering a merger, acquisition or IPO much higher. With regard to IT investments, companies that delay implementation will render portions of their IT investments useless. Using manual processes can work for a short time but are ultimately inefficient and prone to errors – causing lots of rehabilitative work once the upgraded systems are deployed.
In order to mollify some of the fallout from delayed implementation, Marc stresses the importance of early communications with stakeholders. If the company is not in a position to renegotiate leases, preemptive and full communications with stakeholders is essential. Companies that don’t adopt early implementation must manage their messages so that readers of their financial statements understand the true health of the company and future expectations under the new rule. Companies that haven’t yet grown to the point of having in-house communications staff should consider hiring a professional communications consultant. Getting this message right is that important.
Because the new leasing rule is so complicated and has tentacles reaching beyond the accounting and financial functions into IT, sales, procurement, facilities, investor relations, human resources, etc., the development of upgraded, bulletproof practices and processes along with the enhanced skills necessary to deploy them is a steep curve. Successful implementation depends on a depth of professional knowledge and resources that even most larger companies don’t possess and that audit firms are restricted from providing. In short, companies will need outside help.
Marc recommends that companies reach out to a trusted accounting advisor who has a proven history of helping clients resolve lease accounting issues. If they’ve updated their practices to ensure the identification of issues that are material under the new rule, they can most likely continue to help companies comply accurately and on time.
About Blythe Global Advisors
Blythe Global Advisors is a full-service accounting advisory firm located in Irvine, CA that helps companies of all sizes meet their reporting obligations by filling the gap in accounting and financial expertise. With extensive Big Four experience in all areas of accounting and financial reporting, Blythe Global Advisors offers a broad range of sophisticated, customized, affordable solutions and services to help companies prepare successfully for audits, upgrade the human and technical competency of their accounting and financial infrastructures, make investment decisions with confidence, and convey their companies’ true value to external and internal stakeholders. It ranks number 12 on OC Business Journal’s 2018 Management Consultants List.
About Marc Blythe
As president of Blythe Global Advisors, Marc Blythe brings more than 25 years’ experience advising companies of all sizes across all industries on their accounting and financial reporting requirements. Prior to forming Blythe Global Advisors, Marc was an audit partner at EY.
For more on Blythe Global Advisors, check them out at www.blytheglobal.com or contact them at 949-757-4180.
Contact Info:
Name: Marc Blythe
Organization: Blythe Global Advisors, LLC
Address: 19800 MacArthur Blvd., Suite 300, Irvine, CA 92612, United States
Phone: +1-949-757-4180
For more information, please visit http://www.blytheglobal.com
Source: PressCable
Release ID: 415387
