Hello again everyone! It has been a while. With our firm leading & supporting more than 20 PeopleSoft Lease Administration projects, I have put together a list of the 3 key Lease Administration steps to ensure an effective and efficient implementation as well as a speedy project timeline.
1. Gather your lease data as early as you can.
The best time & resource investment for avoiding project bottlenecks is to gather your lease data and have it organized before the project begins. This includes creating amortization schedules to verify your lease data once it has been entered into PeopleSoft. Your amortization schedules will also contain the implied interest or borrowing rate(s). Your organization may choose to use a single rate across the board for all your leases, or you may choose a more detailed approach for borrowing rates based on lease length, risk, start dates, etc.
Assigning chartfield values to your lease data will also be required. Although it is not new information, it should be gathered along with your lease data so that it is readily available when needed. Also verify the Lessor associated with each lease and if any leases have third party payees. For property leases, square footage is also a required field. Gather the original lease start date and the lease signed date as they will also be required.
Where applicable, other lease elements that will need to be gathered are lease incentives, initial direct costs, pre-paid rent and lease options.
2. Plan your accountant’s time carefully.
Validating accounting entries for the new rules as well as gathering and verifying lease data will require an accountant’s time. Special attention should be given to monthly & quarterly closings, etc. To maximize your accountant’s time between closings and not over stretch it during closings, careful resource planning should be considered. This will be especially critical during User Acceptance Testing and help to keep the project timeline on track and avoid costly bottlenecks.
3. Know your ROU asset values and the impacts on your financial statements.
Once you have your lease data in place, it will be important that you know your ROU asset values and the impacts on your financial statements. Playing a big part in this evaluation will be lease options and the decision to decide which lease options to include in your ROU balances. The ability to work with your audit team and analyze the impacts upfront will help to finalize your lease data and minimize re-work after go-live. This analysis may also depend on your accountant’s availability between closings and may require several meetings before the final numbers are approved. Doing this analysis upfront will help maintain the timeline.
Paying attention to these 3 key Lease Administration steps will ensure that your lease implementation project proceeds smoothly. As always, thank you for reading and be sure to read our other Lease Administration Blogs.
Steven Brenner, CPA
Senior Principal Consultant