Month End Procedures
ASC 842 and IFRS16 accounting standards require asset level accounting. The financial variables that underpin your accounting may change on a periodic basis. If these variables are not updated in your lease accounting system, then the journal entries being created in the sub ledger will be inaccurate. As a result, you will need to ensure that all master data including but not limited to cost centers, foreign exchange rates, incremental borrowing rates, and reporting areas being used by your ERP are updated in your lease accounting application on a timely basis.
Many of the financial variables needed to perform lease accounting may not be tracked in your ERP as master data. Depending on the functionality you are incorporating into your business processes, you may need to identify how information such as your debt weight, net income, total assets, total revenues, credit ratings, and NOLs will be kept up-to-date in the lease accounting systems.
Download a PDF version of the guide.
Update Rates
Before running any functional currency or reporting currency reporting, you will need to ensure your foreign exchange rates have been properly loaded.
FX Rates
The first step in this process will be to update your foreign exchange rates. This can be accomplished via a bulk import. See below for the steps:
Step |
Action |
|---|---|
1 |
Populate the CIW tab for FX Rates. |
2 |
You will need to provide the following information:
|
3 |
Once this data has been populated, save your CIW import file with an easily identified name. You may wish to house this import file in a My Library shelf for future reference. |
4 |
Go to the Bulk Import workspace in the user interface. |
5 |
Select the Exchange Rates tile. |
6 |
Choose your saved CIW file and click Validate. |
7 |
If you have any red errors, address those and re-validate your import. If you have yellow warnings but want to continue with the import, check the boxes next to the rates and click Import. If you do not have any errors or warnings, click Import. |
8 |
Once you have successfully imported your rates, you will see green dots next to the rates with an indication of how many rates were successfully imported. |
IBRs
Incremental Borrowing Rates (IBRs) are set within the user interface or by bulk import. This section provides some useful examples of monthly updates. Clients should have a checklist of all updates that would apply to their particular circumstances. For example, tax rates and accounting depreciation policies may or may not apply and may be updated on a quarterly or annual basis.
To update your IBRs in the user interface, follow these steps:
Step |
Action |
|---|---|
1 |
From the Left NavBar, select Configuration Settings under Accounting Administration. |
2 |
Within the Configuration Settings workspace, go to the Lessee Rates tile. |
3 |
Select the Lessee, Country, and Term from the drop-down menus. |
4 |
Enter the relevant IBR, Debt Rate and Equity Rate, as applicable. |
5 |
Indicated the Effective Date of the new rate(s). |
6 |
Click Save. |
To update your IBRs using a bulk import, follow these steps:
Step |
Action |
|---|---|
1 |
Populate the CIW tab for Lessee Rates. |
2 |
You will need to provide the following information:
|
3 |
Once this data has been populated, save your CIW import file with an easily identified name. You may wish to house this import file in your My Library shelf for future reference. |
4 |
Go to the Bulk Import workspace in the user interface. |
5 |
Select the Lessee Rates tile. |
6 |
Choose your saved CIW file and click Validate. |
7 |
If you have any red errors, address those and re-validate your import. If you have yellow warnings but want to continue with the import, check the boxes next to the rates and click Import. If you do not have any errors or warnings, click Import. |
8 |
Once you have successfully imported your rates, you will see green dots next to the rates with an indication of how many rates were successfully imported. |
Activity and Accounting Reports
There are several reports that can be run as part of your defined workflow for Month End procedures. The following are some of the more common reports generated for ASC 842 compliance purposes:
Portfolio: Trial Balance
Portfolio: Account Activity Trend
Portfolio: Account Balance Trend
Lease Classification
Contractual Obligations
Maturity Analysis Report
Quantitative Analysis Report
Anomalies Report
EOT Pipeline
EOT Activity
The report criteria pages available in each report are important and should be reviewed in detail during the implementation process and are typically unique to each business. They are not explained below. Please refer to the LeaseAccelerator User Guide - Reporting for detailed explanations.
Many other reports are available for management and analytical purposes. Each report can be found by selecting Reporting from the Left NavBar in the UI, and then selecting the appropriate tile. Some reports are Business Intelligence (BI) reports and will allow users to view one or more tables prior to export. These reports will provide a Submit button instead of an Export button. After submitting, an unmarked export button will display with several export options available when clicked.
Ledger Export
As part of the monthly close process, users will want to post journal entries from a lease accounting subledger to the General Ledger. Users may generate a Ledger Export report as part of their process of transferring details (e.g., account number, account name, transaction amount, ledger date, transactional currency, and credit/debit specifications).
The Ledger Export report is generated in the Reporting workspace under the Integration tile. The Ledger Export Report exports to Excel. Users will first enter their desired parameters, and required fields then click Export to generate this report. Users may also opt to click Generate Report to generate a PDF version of this report.