ValuD: Six major enhancements for lease accounting in TRIRIGA 10.5.3


Let’s review the six major enhancements for advanced lease accounting…

  • 1. Period end close capabilities. TRIRIGA 10.5.3 delivers “Advanced Lease Accounting Period Close” which ensures that no additional journal entries can be posted for that closed period…
  • 2. Enhanced segregation of duties. With IBM TRIRIGA 10.5.3, the roles and responsibilities of Lease Accountant and Lease Administrator have been clearly delineated…
  • 3. Streamlined modification processing. A revised process for recording lease modifications has been introduced in this version which supports FASB/IFRS compliance and creates a single process flow for all modifications…
  • 4. Disclosure requirements templates (quantitative metrics). IBM TRIRIGA 10.5.3 comes pre-loaded with a variety of OOB report templates which support FASB/IASB lease accounting compliance…
  • 5. Journal Entry Configuration Framework. With capabilities to generate Journal Entries for ASC 840 and ASC 842 under US-GAAP, as well as for IAS 17 and IFRS 16, IBM TRIRIGA 10.5.3 practically transforms the Real Estate Manager module into a sub-ledger system for Real Estate and Asset Lease Accounting…
  • 6. Simplified ERP Integration (Data Transfer Object). IBM TRIRIGA 10.5.3 simplifies the process of transferring the lease accounting data into your ERP system by creating a Data Transfer Object (DTO) file that loads into the ERP General Ledger…

[Admin: To see other related posts, use the ValuD tag.]

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Where are the latest lease accounting videos?


This wiki lists our lease accounting videos. The IBM TRIRIGA Lease Accounting team presents the key features and enhancements of our lease accounting tools from 10.5.0 through 10.5.3.1, including partial payments, FASB/IASB setup, ASC 840/842, GAAP/IFRS leases, and index adjustments.

[Admin: This post is related to the 02.22.16 post and 09.29.14 post about finding information on TRIRIGA lease accounting. To see other related posts, use the Leases tag or Accounting tag.]

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How does TRIRIGA tackle 2019 lease accounting change implications?


Are you getting ready to address the implications of the new lease accounting changes with TRIRIGA? Although FASB’s ASC 842 and IASB’s IFRS 16 will take effect in 2019, many organizations are only now beginning to realize the amount of effort required to meet the new standards…

The biggest changes to businesses will be the new Right of Use (ROU) Assets and Lease Liabilities that will hit balance sheets, as well as the intensely manual approaches and effort that many see before them. How many organizations are leveraging Integrated Workplace Management Systems (IWMS) to manage their real-estate holdings and automate these manual efforts?…

In order to help organizations comply with the new standards, and understand the implications of these changes, TRIRIGA continues to deliver a single integrated workplace management system with new enhancements in the next release. TRIRIGA supports the lifecycle of facilities management and will automate compliance activities to address changes that affect multiple teams and roles.

Here’s how TRIRIGA can help:

  • CFO and CAO: The release of IBM TRIRIGA 10.5.3 will provide a sub-ledger system for real estate and asset lease accounting that is able to generate journal entries out-of-the-box for ASC 840 and ASC 842 under US-GAAP as well as for IAS 17 and IFRS 16. It also covers period closings and report generation for the most common reports required under the new standards.
  • Real Estate and Fixed Asset Managers: The release of IBM TRIRIGA 10.5.3 separates the duties of a lease administrator and a lease accountant, allowing the lease administrator to enter contractual information, and then enabling the lease accountant to run classification tests, reassess lease decisions, and report on the ROU Asset and Lease Liability.
  • Facility Management, and Occupants: There are also new capabilities to improve day-to-day and occupancy experience. They can leverage a new Workplace Services offering that engages everyday employees through new mobile web apps that provide access to services managed by IBM TRIRIGA, anywhere, and on any device. This includes: a new Service Request app to submit work requests, a new Reservation app to quickly create reservations for individual workspaces or multi-attendee meeting rooms, and a new location-aware Workplace Services Portal to provide a single, unified access point for launching the apps and tracking status of requests…

[Admin: To see other related posts, use the FASB tag or IFRS tag.]

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IV96316: Initial liability carryover balance is not applied


For TRIRIGA 10.5.2/3.5.2 OOB, there is an issue with the “Initial Liability Carryover” (ILC) field. In both operating leases and capital leases, when a value is entered in this field, the right of use (ROU) asset in the future accounting schedules is not reduced at Day 1 (against lease liability (LL) and initial direct costs (IDC)).

  • What should happen: Day 1 ROU = Day 1 LL + IDC – Initial Liability Carryover.
  • What is happening now: Day 1 ROU = Day 1 LL + IDC. (No ILC is applied.)

The balance in this ILC field should get pulled into the Day 1 ROU asset balance, and it currently does not. If this field is functioning per OOB, then we need to fix it. It is critical that the transition to the new accounting standards is calculated correctly.

The initial carryover balance (ICB) was not applied to new accounting schedules. Moving forward, if leases are created on or after the look-back period, the initial carryover balance will now be applied to operating leases and finance/capital leases.

[Admin: A similar article is also posted in the IBM TRIRIGA blog. This post is related to the 07.27.16 post by ValuD about handling GAAP and IFRS in TRIRIGA leases. To see other related posts, use the ROU tag.]

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ValuD: How should you handle GAAP and IFRS in TRIRIGA leases?


As a matter of fact, both FASB and IASB initially started out in early 2010 with the idea of coming up with a single lease accounting rule. But in early 2014, they agreed to disagree in certain areas and as a result, dropped the idea of a uniform standard… Some of the major differences between the FASB GAAP and IASB IFRS 16 model include the following:

  • Accounting model: While FASB has proposed to continue with the dual accounting model, where the lease classification test is based on current U.S. GAAP classification criteria, IASB now requires all leases reported on the balance sheet to be treated as finance leases.
  • Measurement of lease assets: Under the FASB model, these former off-balance sheet leases will end up with a slower rate of depreciation than under the IASB model, which requires the leases to be depreciated on a straight-line basis…
  • Presentation of lease liabilities: The organization is expected to present lease liabilities relating to former on- and off-balance sheet leases as separate line items under the FASB model, while there is no such compulsion under IFRS 16…

How can IBM TRIRIGA help?

IBM TRIRIGA Real Estate Manager 10.5.1 will enable you to accelerate compliance with both the FASB and IASB leasing standards. Some of the newly added features for complying with these leasing standards are listed here:

  • 1. Lease classification can be set as “Finance” and “Operating” (instead of “Type A” and “Type B” that appeared in the earlier versions) based on the lease treatment calculation…
  • 2. IBM TRIRIGA supports the re-measurement logic under IFRS by letting the user choose the asset measurement methodology from three options (“At amortized cost”, “FV under IAS 16”, and “FV under IAS 40”)…
  • 3. IBM TRIRIGA 10.5.1 allows organizations to adopt the new standards either individually on a lease-to-lease basis or for multiple leases all-at-once using the Bulk Review Assumptions process…
  • 4. Initial Direct Costs, Prepayments, and Past Lease Incentives are no longer included in the Liability Value of the “Operating” and “Finance” schedules keeping up with the changes in the leasing standards.
  • 5. “Finance” or “Operating” schedule calculations for Retail Calendars have been enhanced to comply with both the standards for Net Rent and Rent Expense calculations.
  • 6. Making lease modifications by using the “Data Revise” and “Amendment” options, the user can make additional entries, make changes or correct errors in existing leases…
  • 7. If a new lease needs to be created during the course of modification of an existing lease, the “Copy and Link” feature can be used to copy the appropriate data from the current lease and link the two leases…
  • 8. IBM TRIRIGA allows the user to reassess the lease after the adoption of the new standards, which is helpful if there are changes in borrowing rates or fair market value…
  • 9. If an organization has a multinational lease portfolio, IBM TRIRIGA can help report local accounting standards…
  • 10. IBM TRIRIGA can also generate various kinds of impact reports which can help users to understand the impact of the new standards…

[Admin: This post is related to the 06.17.16 post about the five steps to FASB and IASB lease accounting readiness.]

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ValuD: Finding the budget for FASB lease accounting


All new guidelines come with their fair share of challenges and the FASB leasing standard is no exception – not to mention the associated costs in implementing such mandatory measures. Provisioning for such statutes becomes a prerequisite in such cases and the responsibility is on the organization to come up with additional sources of funds that will be needed to finance these mandatory requirements…

Impact

While the new leasing standard ensures greater transparency for all stakeholders, FASB has made sure that the transition to the new update is relatively less complicated by letting companies use their existing business processes and systems. This is so because the treatment of operating leases in the Income Statement and Cash Flow Statement remain unchanged, which is similar to existing GAAP methodology…

Challenges

One significant financial challenge you might have to face as an organization is the costs of additional personnel to evaluate your lease portfolio. The new leasing standard requires a wide range of information such as lease commencement date, useful life, fair market value, borrowing rate, renewal/purchase options, any space changes during the lease term, landlord allowances, initial costs and impairment charges, if any and so on…

What can be done?

More often than not, updating the IT infrastructure of the organization can be a better solution for most of the challenges posed by such mandatory requirements. An Integrated Workplace Management System (IWMS) software like IBM TRIRIGA can help resolve most of the issues relating to FASB implementation and what’s more, also result in cost savings in the long run…

[Admin: This post is related to the 06.17.16 post about FASB readiness, and the 04.21.16 post about what FASB is.]

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Does anyone know if TRIRIGA will have GAAP-IFRS dual reporting?


One thing that has come up with the new FASB requirements is the need for dual reporting in terms of accounting standards. US-based companies report using FASB (GAAP) overall, but may have local reporting requirements under IFRS. Has anyone heard if IBM TRIRIGA plans to support dual reporting? Update: I was just informed that the newest TRIRIGA release will include a dual-reporting option. Good to know.

[Admin: This post is related to the 05.19.16 post about TRIRIGA and IFRS 16.]

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