Over half (51%) of firms reportedly have more than 250 leases but continue to operate without lease accounting integrated into their automated management systems.
According to a survey conducted by EY and LeaseAccelerator, a lease lifecycle automation software provider, half of companies are still addressing lease accounting standards manually.
The 2021 Global Lease Accounting Survey found that that despite the introduction of the accounting standards for public companies in 2019, 25% of respondents continue to use spreadsheets to manage lease accounting.
Moreover, 58% said that they do not have a centralized lease versus buy process, while 42% of firms terminate under 70% of their leases on time and overpay.
The technology gap reportedly drives audit risk and accounting costs, in turn limiting organizations’ returns from leasing and compliance investments.
Micheal Keeler, CEO at LeaseAccelerator, said: “In this survey, lease accountants identified key unresolved accounting challenges and explained practical ways to improve their lease management this year.
“It’s clear that organizations in all phases of adoption can be more efficient and integrated to reduce their overall risk and cost and drive a higher ROI.”
The report included a number of recommendations for companies to increase the efficiency of their lease accounting, including the adoption lifecycle automation, outsourcing or managed services.