Update: On April 8, 2020, FASB proposed to delay implementing the new lease standard for non-public organizations, making their new effective date the fiscal year starting after Dec. 15, 2021.

As we kick off 2019, everyone posts predictions for the coming year and I enjoy reading those as much as the next person. With the new lease standard, it seems that predictions are more along the lines of, “the sky is falling!” There are only so many times we can hear that we’re in dire straits, so I thought I’d shake it up a bit.

Understanding the reality and the timeline of the new lease standard, what do I want to happen in 2019? Read on for my wishlist.

1. Public companies are ready on time (for fiscal years starting after December 15, 2018) and begin reporting with ease on the impact of the new lease standard as part of their Form 10-Qs. While this recent PwC survey gives me pause on my very first wishlist item, we are hoping that activities in both the fourth quarter 2018 and first quarter 2019 see this number reach 100%. Having easy-to-implement software is a critical aspect of being ready quickly.

2. Non-public organizations talk to their friends at public companies and learn tips and tricks to better implement the new lease standard in 2020. Public companies are facing challenges—and discovering solutions—as they implement the standard now, and non-public organizations can benefit from the extra year to implement by learning from public company experiences.

3. Non-public organizations take a serious look at the transition practical expedients offered by the FASB and adopt as many of them as possible. In a recent LeaseCrunch® interview, industry expert John Hepp shared his thoughts on the benefits of using the practical expedients (“the spoonful of sugar to help the medicine go down” as he calls them).

4. Even if they only have a handful of leases, non-public organizations take time early in 2020 to assess their lease portfolio and establish an implementation plan so they are ready for the new lease standard with plenty of time. CPA firms: Want to help your clients start preparing now? Send them this actionable checklist.

5. Non-public organizations with large operating lease portfolios start talking to their bank at least six months before their Initial Application Date to ensure everyone is on the same page with how the new lease standard will affect debt covenants. (For those on a calendar fiscal year, your Initial Application Date is January 1, 2021 now that FASB has delayed implementation by a year for non-public companies) This early action in 2020 is critical, as a recent LeaseCrunch® survey found that 68% of CPA firms are concerned that their clients could potentially violate bank loan covenants when the new lease standard impacts the balance sheet.

6. All organizations take the new lease standard as an opportunity to better understand their lease portfolio, thereby driving more efficiencies throughout the organization. Though implementing the new standard will be a compliance burden, forward-thinking organizations can also attain strategic operational benefits through the implementation process (CPA firms: this is a perfect opportunity to add value for your clients!).

7. People realize the benefits of the wonderful lease accounting software out there and don’t waste their time trying to use spreadsheets! CPA firms can provide this educational guide to clients, to explain the risks of using spreadsheets to implement the new standard—then offer to help simplify the process.  

There you have it—my list of what I’d like to see happen in 2019 regarding the new lease standard (and hopefully some beneficial resources for those reading this). I’d love to hear your thoughts in the comments below. What would you like to see? What are your predictions?