RGP, a global consulting and professional services firm, and CoStar Real Estate Manager, a division of CoStar Group, and a lease management software provider, announced a strategic alliance to provide companies with an end-to-end solution to meet the looming deadlines for compliance with new lease accounting standards.
The new standards, finalized last year by the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), require companies to recognize practically all obligations for real estate, equipment and other leased assets on their balance sheets. U.S. Securities and Exchange Commission data estimates that Fortune 500 companies currently have more than $700 billion in off-balance sheet lease obligations that will be affected by the new standards, while the IASB projects new balance sheet additions worldwide may be in excess of $3 trillion.
This significant shift in accounting policy may have far-reaching impacts in many areas such as policies, procedures, systems, debt covenants and financial ratios. It will affect businesses in numerous industries heavily invested in lease arrangements, especially those in consumer products, restaurant, retail, financial services, manufacturing/distribution, utilities and oil & gas. By proactively preparing for the new standards, businesses can prevent financial reporting issues, increase internal controls and even receive a return on their investment.
CoStar’s lease accounting software provides the complete functionality needed to manage and report on real estate, equipment and other leased assets. It is delivered in a software-as-a-service (SaaS) format and offers out-of-the-box functionality that includes balance sheet impact, classification tests, amortization schedules, journal entry processing and GL system integration. To ensure compliance with Sarbanes Oxley’s requirement to demonstrate effective internal controls and procedures for financial reporting, CoStar’s platform completes an SSAE 16 audit annually.