Lease Accounting Technology Struggles Catch Eye of SEC
- Bricker warns companies not to under-invest in technology as reporting deadline nears
- Audit committees urged to avoid technology gap
The SEC’s chief accountant has some advice for companies struggling to prepare for changes in how they account for leased property.
“My message is for management teams to not under-invest in the technology that is needed,” the Securities and Exchange Commission’s Wesley Bricker told Bloomberg Tax.
Companies have faced challenges in selecting and installing new software needed to track leases of buildings, barges, and manufacturing and office equipment. The software is used to identify relevant information for financial reporting. Companies must report the value of their leased assets on their balance beginning in 2019.
But many companies have delayed preparation for lease adoption as they focused on changes required by the revenue recognition standard, as well as the 2017 tax law.
Directors also play a role in plugging an emerging technology gap for financial accounting, Bricker said Oct. 5 at the annual meeting of the Association of Audit Committee Members Inc. in Philadelphia.
“Don’t let management cost-cut their way into a damaging financial reporting issue,” he told the organization.
Auditors Embrace Tech
Bricker said that public companies are falling behind their auditors, who are quicker to embrace and invest in new methods and technologies to collect auditing data.
“Financial reporting quality starts at the inception. The better the accounting systems are in creating books and records, and effective internal accounting controls, the better the integration of those financial information systems with the audit evidence-gathering process,” he said.
Bricker praised the U.S. audit regulator for its research into emerging technologies.
The Public Company Accounting Oversight Board is looking into whether its standards need to be updated to reflect emerging technologies such as artificial intelligence and advanced analytics, and the skills needed to use those tools.
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Bloomberg Tax Leased Assets™ is an end-to-end lease accounting software solution that helps companies track and manage all lease asset types, provide complex calculations for right-of-use (ROU) assets and lease liabilities, deliver advanced reporting capabilities for journal entries, payment schedules, and more.
This article was originally published in Bloomberg Tax’s Financial Accounting Resource Center. Rely on expert practitioners for practical guidance and real-world approaches to complex accounting issues.