January, 19th 2016 – Planon announced today it has received validation from a Big Four accounting firm on leasing calculations performed by Planon’s software. This validation confirms Planon has the capacity for accurate lease calculations for operating and finance/capital leases in accordance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles in the United States (US GAAP), as well as the International Accounting Standards Board (IASB)
The validation comes in advance of a new accounting standard from the Financial Accounting Standards Board (FASB) that would require companies and organizations to include lease obligations on their balance sheets. These standards are expected to be effective for public companies beginning December 15, 2018 and for private companies beginning December 2019. The final Accounting Standards Update (ASU) is expected to be published in early 2016. More information about the upcoming Leases ASU is available at Fasb.org.
In reviewing Planon, the accounting firm validated the product for various uses, based how the new FASB standards will affect real estate holdings. These include both lessee and lessor perspectives, as well as a variety of payment periods and accounting periods. Specifically, they include:
- Accurate calculation of both operating and capital lease, for both cash flow and cost accounting
- Accurate calculation of indexing for both types of lease, for both cash flow and cost accounting
- Accurate calculation of modification of lease contacts, renewal, early termination, for both cash flow and cost accounting
- Migration of existing operating leases to a new implemented Planon system
The leases project was added to the FASB’s joint agenda with the IASB in response to concerns from investors, other financial statement users, and the U.S. Securities and Exchange Commission (SEC) regarding the lack of transparency relating to material lease obligations that have been reported off-balance sheet.
“With the new accounting standards, facility and real estate managers will need to understand how their lease agreements affect the balance sheet,” said Fred Guelen, Planon CFO and President of North America. “Today’s announcement of validation from a Big Four accounting firm proves that Planon’s software can handle these accounting situations and allows facility and real estate managers, as well as CEOs and CFOs, to have confidence in the transparency and compliance of their lease reporting.”