Help Clients While Maintaining Independence
As a CPA assisting clients with implementing the new lease accounting standard, you must maintain independence by providing guidance, explaining policies, and helping with data input while ensuring clients make all final decisions and assert data accuracy, and by recommending compliant software solutions that support client verification without compromising your objectivity.
As a CPA, maintaining independence while assisting clients is crucial, especially when helping them implement new accounting standards such as the new lease standard. Clients often rely on your expertise, but it's important to ensure that your involvement does not compromise your independence.
Who Does What?
When discussing the new lease standard with clients, you may find that many lack the capacity to handle implementation or seek your guidance throughout the process.
Generally, you can assist clients by:
- Explaining the lease standard
- Helping them make policy decisions
- Guiding them through lease audits
- Assisting with transitioning leases on the books
- Providing input on key details
- Inputting data for clients who lack resources
However, the client must make final decisions and assert the accuracy of any data elements that drive journal entries and footnote disclosures.
For example:
- You can explain the pros and cons of various policy options, but the client must decide which policies to adopt and which practical expedients to elect. Your firm can review these decisions and offer insights, but the final decision rests with the client.
- If a client has a 10-year lease with a 5-year renewal option, you can guide them on the required analysis to determine whether they are reasonably certain to exercise the renewal option. The client must ultimately decide if an economic incentive exists to include the renewal option in the lease term. You then review whether their decision-making process complies with the new lease standard as part of your assurance work.
Choosing the Right Software
Selecting appropriate software is essential for implementing the new lease standard. Using software is recommended over manual spreadsheets, which can be risky.
Key considerations include:
- Ensuring the software complies with AICPA guidelines on hosting services independence
- Choosing software that allows clients to easily verify the accuracy of data inputs
For example, some software provides reports showing all lease data entered into the system, enabling the CPA firm to share this with the client so management can assert its accuracy.
If you have questions about the new lease standard or want to learn more about how lease accounting software can help simplify the process for you and your clients, consider scheduling a consultation with an expert.