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This article will outline how to review key inputs for lease data in lease administration to ensure accurate accounting.
The first step to a successful Lease Accounting implementation is to ensure that all your leases have been set up in Lease Administration and have been vetted to ensure accuracy.
It is crucial that key inputs such as rent schedules, key dates, etc. are accurate in Lease Administration as Lease Accounting utilizes these inputs throughout the implementation process.
Another consideration is that you take an inventory of your active leases within your organization to ensure that your Occupier database is complete.
You should also assess whether your organization has any embedded leases. For guidance on embedded leases visit here.
Below are a few common data points that you should review prior to commencing Lease Accounting:
1. Payment Schedules (including free rent periods and/or escalations). To review the payment schedule, you can export the monthly financial obligations report or by review at the individual lease level by clicking on the "Financials" tab of a lease, as shown below:
You can review base rent and additional rent by toggling the Rent drop down.
2. Critical dates (ex: lease commencement date, possession date, expiration date). You can export your critical dates for your real estate and equipment lease portfolio within Lease Administration or review it on an individual lease basis by clicking on the "Details" tab of a lease, as shown below:
3. Renewal/termination options. It is important that you let the Occupier team know if you are "reasonably certain" to exercise any renewal or termination options within a lease as these will impact your lease term- which will in turn impact Lease Accounting.
4. Ensuring ALL of your leases are in Occupier. You can export your entire real estate and equipment lease portfolio within Lease Administration by following the steps here.
5. Review legal entities assigned to leases. Refer to the article here for more information.
If at any point in your review process you determine a change needs to be made, follow these steps to edit the lease.