how healthcare organizations can prepare for asc 842 | gasb … · 2020. 4. 14. · how healthcare...

How Healthcare Organizations Can Prepare for ASC 842 | GASB 87 | IFRS 16

Webinar Logistics: • Audio will be streamed through your computer (via ON24 platform). Please unmute your speakers.

• Q & A Session Following Presentation. Ask Questions any time in the ON24 Panel (Lower Right).

• 1 CPE Credit: Please complete and submit Evaluation Form at end of session.

• Recording and slides available later this week.

© 2017 LeaseAccelerator Inc.

How Healthcare Organizations Can Prepare for ASC 842 | GASB 87 | IFRS 16

© 2019 LeaseAccelerator Inc. © 2019 RGP .

Today’s Webinar

Joni NoelSenior VP, Healthcare

• Slides Will Be Available for Download on Website

• Video Replay Later This Week

• Polling Questions – Use ON24 Console

• Ask Questions in the ON24 Panel (Lower Right)

• Use Chat for Technical Issues

• 1 CPE Credit – Complete & Submit Evaluation Form at end of webinar


Your Presenters

Ingemar LaneviTimothy TickleVP, Finance & Capital MarketsDirector, Technical Advisory Solutions, Healthcare


Agenda

1. Impact of the new lease accounting rules

2. Key decisions/data required to start your implementation

3. Common implementation pitfalls to avoid

4. Budget, plan and staff to achieve Day 1 compliance

5. Considerations for ensuring Day 2 and beyond compliance


1. IMPACT OF THE NEW LEASE ACCOUNTING RULES


Organization Transformation Requires the Right Stakeholders

Accounting & Finance Financial statements Governance Tax, FP&A and internal

audit

HR Policies and

procedures Organizational design

Assets & Facilities Equipment Buildings Lease contract

management& administration

Procurement & Sourcing Acquisition of

new leases

IT Systems Data and integrations

Real Estate Lessees/lessors

Legal Lease review and

approval

If applicable


KEY DECISIONS/DATA REQUIRED TO START YOUR IMPLEMENTATION


Choose Policy & Implementation Decisions Carefully Accounting policy will be different for US GAAP vs IFRS – try to minimize differences where possible

Materiality

Implementation date

Portfolio approach

Practical expedients: Short-terms leases, separation of lease/non-lease, use of hindsight, package of transition expedients

Software implementation decisions:

• Integration with AP (load embedded leases? Payment timing? Reconciling)

• One or more software solutions, or more than one instance

• Immaterial?

• Short-term leases


Data Gathering Will Take More Time Than You Think

THIRD STEP

Identify Sources

Determine all sources of information relative to lease portfolio

FIRST STEP

Determine Requirements

Assess data of existing sources against ASC 842 requirements

SECOND STEP

Data Abstraction

Data gaps in current source systems may require additional info from lease arrangements

THIRD STEP

Iterative Review

Review and validate accuracy of data set

FOURTH STEP

Consider on-going data maintenance requirements too


3. COMMON IMPLEMENTATION PITFALLS TO AVOID


Have A Plan & Stick To It, Reassess As Necessary

Stakeholder alignment on objectives

Identify and scope lease agreements

Sample lease agreement review

Disclosure and transition evaluation

Gap analysis

PROJECT MANAGEMENT | TRAINING & CHANGE MANAGEMENT | CROSS-FUNCTIONAL COORDINATION

Draft accounting policies

Transition method and disclosure analysis

Draft business requirements for software selection

Finalize data requirements

Develop data gathering approach and initiate data collection process

Application development and build out

Data import into application

Integration tests and UAT signoff

Updated procedures and controls

Cumulative adjustment calculation

Assessment Design Implementation


Define Your Requirements Before Selection Software

Lessor/Lessee

Equipment vs. Real Estate

Accounting (ASC 842/ IFRS 16) vs. life cycle management

Subledger / single source of truth

Size of portfolio and cost (licensing and implementation)

Cloud vs on-premise

Integration with other systems (ERP and legacy)

Vendor presence and stability

Potential independence concerns

Detail level

Upload capability

Potential ROI

Participation of all stakeholders

Define transaction use cases to evaluate systems


Evaluation of materiality (qualitative too – other regulatory?)

Discussion with auditors

Could affect practical expedient election on transition

You Might Find Errors


4. BUDGET, PLAN AND STAFF TO ACHIEVE DAY 1 COMPLIANCE


Your Project May Cost More and Take Longer Than You Expect

Allow time for negotiating contracts (software, service providers)

Auditor response time or change in position

Documents off-site or in storage

Number of leases often underestimated – difficulty in determining completeness

Numerous assets per lease

Try to get budget approval for the whole project

Don’t skimp on project and change management – dedicated resources are best

Unforeseen staff issues

Data gathering & policy decisions – determination of incremental borrowing

rate

Technical issues (calculation complexity, FX, software implementation

issues)


Clearly define process and responsibilities for ownership

Introduce control without crippling the business (Center of Excellence)

Lease origination, reassessment and modification trigger points

System and reporting/disclosure controls, service providers

Consider lease/buy strategy

Continue automation journey

Outsourcing?

Operationalize For Sustained Compliance - Day 2


5. CONSIDERATIONS FOR ENSURING DAY 2 AND BEYOND COMPLIANCE


The Journey Beyond Compliance

Start Line

DAYONE

DAYTWO

DAYTHREE

1

2

3

Finish Line

YOU AREHERE

COMPLIANCESEC REQUIREMENTS

SUSTAINABILITYSCALE COST EFFECTIVELY

LEASING STRATEGYGROWTH & AVOIDING LOSSES


Day 2 Starts Before the Effective Date

JanuaryOctober


Day 2: Activities - Periodic Attestation of LeasesData Center Logistics Operations Manufacturing Corporate IT

End of Term Plans

PhysicalLocation

AccountingCost Center01

Configurable Business

Rules

Who to Ask?• Asset Owner• Asset Users

When to Ask?• Quarterly• Semi-Annually

How Many to Verify?• 100 assets• 500 asset

How Frequently to Remind?• Weekly• Daily

Guaranteed Residual Value

01


Day 3: Best in Class Lease Procurement

G

Request for Proposal

Competitive Bids

Standardized Contracts

VendorSelection

DefineRequirements


Questions?

Joni NoelSenior VP, Healthcare RGP [email protected]

Timothy TickleDirector, Technical Advisory Solutions RGP [email protected]

Ingemar LaneviVP, Finance & Capital Markets [email protected]


Contact Us – Sign Up for Free On-site Workshop

New Lease Accounting Standards for Healthcare

Walk away with an understanding of how the implementation of this standard will impact your existing policies, procedures, systems and disclosures related to leases.

• Significant impacts of the new standards

• Developing a timeline to implement the new standard

• Developing a project plan

• Technology considerations (LeaseAccelerator demo)

• Anticipating implementation challenges.Contact Us: [email protected]


Check Your Inbox

• Slides Will Be Available for Download on Website

• Video Replay Available Later this Week

• CPE Credit Information will be emailed via RGP


Evaluation Form | 1 CPE Accounting Credit

THANK YOU

www.leaseaccelerator.com www.rgp.com

Joni NoelSenior VP, Healthcare RGP [email protected]

Timothy TickleDirector, Technical Advisory Solutions RGP [email protected]

Ingemar LaneviVP, Finance & Capital Markets [email protected]