Thousands of lease contracts. Millions of dollars in leases. Multiple countries.
As changes to lease accounting regulations ASC 842 and IFRS 16 were looming, a global automotive technology company had to address its processes, systems, and controls to ensure compliance. The company had millions of dollars in operating leases tied to over 3,000 lease contracts spread across 40 countries. With incomplete and possibly unreliable data held in many different systems, it would be difficult to comply with the stringent new standards and pass the statutory audit. Then, tracking leases at an asset level would be challenging too, which could mean unintentionally underestimating the value of the leases.
Knowing that failing to comply with the new standards could have far-reaching regulatory implications including fines, sanctions, and reputation damage, the organization had to re-evaluate its existing operating model for managing and accounting for operating leases.