The Financial Accounting Standards Board (FASB) has issued new lease accounting guidelines that will directly affect operating leases with terms exceeding 12 months, particularly in areas with contractual / embedded lease agreements.
Under Accounting Standards Codification (ASC) 842: Leases, lessees recognize assets and liabilities for most leases. In regards to lessors, the new guidance will modify the lease classification criteria and the accounting for sales-type and direct financing leases while eliminating leveraged lease accounting prospectively.
WHO WILL BE IMPACTED?
This requirement applies to any leases embedded in other arrangements, such as supply contracts, data center agreements and outsourcing agreements.
This affects University and related entities in areas with contractual and/or embedded lease agreements such as, but not limited to:
- Real Estate
- Space Planning
- Information Technology
- Accounts Payable
- Financial Reporting
- Financial Operating Systems Support
Our goal is to ensure all leases within the university are in compliance and that lease managers are aware and prepared for this change. The UR Lease Administration team and has communicated to all the standard leasing areas, however, assistance from you is needed.
November 2017: Training will be provided for those affected by this change.
December 29, 2017: GO-LIVE- Necessary to meet these new standards, the UR Lease Administration project has been approved to configure UR Financials’ lease functionality with this project’s tentative go-live date.
- We have selected to use Workday lease functionality for the future business process and system implementation
July 1, 2019: Will need to be in compliance effective as of this date with modified retrospective transition as of June 30, 2019.
- One main reason for the system implementation to go-live prior to the required adoption date is that there are other initiatives or projects that are dependent upon the configuration of the Lease Administration project.
*Stay tuned for more to come…
WHAT SHOULD YOU DO?
If you have any lease contractual agreements originating outside of Treasury, Real Estate, IT or are unsure if you manage a lease, please contact us at URLeaseAdministration@ur.rochester.edu. Specific action will be taken to ensure those affected by the new standard are well informed and guided through a smooth transition process.
If you have any questions or concerns, contact: via email, URLeaseAdministration@ur.rochester.edu.