Case Study

WilliamsMarston Clears the Way for New Lease Standard Adoption

Find out how WM ensured a successful implementation of ASC 842: Leases with a thriving education technology company.

The Challenge

A significant portfolio of leases across parent, as well as foreign and domestic subsidiaries, made implementing the latest lease standard less straightforward.

A large, private education technology organization with various foreign and domestic subsidiaries, needed to adopt ASC 842 as its historical lease arrangements fell under ASC 840. With a portfolio of over 50 known leases to contend with and no central mechanism for tracking lease arrangements and performing lease accounting, the situation was complex.

Deferred rent under ASC 840 was not tracked on a lease-by-lease basis, forcing the need to start from inception on each lease and unwind the accounting to capture the appropriate transition entries. Complicating matters further, the finance department faced limited bandwidth as they navigated the necessary day-to-day responsibilities and could not keep pace with timelines.

The Solution

WM analyzed the existing population of lease contracts and mobilized to centralize and automate accounting schedules, while preparing a new comprehensive policy.

WM began the project by analyzing the company’s existing lease contracts and performed additional embedded lease searches and management questionnaires to help identify and understand the entire population. Once the project was mapped out, the team set up weekly touchpoints to keep deliverables on track, ensuring status updates were regularly communicated to provide visibility into the team’s progress. WM coordinated with the company’s management and its external auditors to reach an agreed upon model and establish materiality parameters under the new standard.

The team then centralized and automated lease accounting schedules, using WM established 842 accounting templates and best practices. This provided the company with a complete baseline deliverable for all future accounting, reporting and disclosure purposes.

WM prepared a comprehensive new lease accounting policy using recently published Big 4 guides as a checklist for impact areas, such as practical expedient elections, lease incentive accounting and modifications. The team also evaluated the extra disclosures required under the new standard and assisted in preparing these disclosures for the company.

The Result

Diligent project planning and output by WM left the company’s lease arrangements in a strong position for future reporting.

WM developed the proposed lease accounting models under the new standard, streamlined and centralized the company’s lease accounting function and created a comprehensive new lease accounting policy. The team also devised an effective work plan to realize – and maintain – the new standard for the lease population going forward. As part of the successful engagement, WM assisted with several components of internal reporting and disclosure, which were impacted by the adoption of the new standard.

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