Lease Lens

Lease accounting was supposed to become routine once the standards landed. In practice, most teams solved the first-time adoption problem and never solved the ongoing one. The initial population of leases was measured, classified and loaded carefully, often with advisory help. Everything that happened afterwards — a renewal exercised, a rent review, a partial termination, a new site signed by an operations manager who never told finance — arrives one at a time and gets handled by whoever is closest.

The result is a schedule set that is arithmetically correct and factually stale. Right-of-use assets and lease liabilities remeasure correctly for the modifications that were entered, which is not the same as the modifications that occurred. Disclosure season then becomes a discovery exercise: maturity analyses, weighted-average discount rates and short-term lease expense are assembled from the schedule set, and the question of whether the schedule set is complete is answered by asking people.

There is a second, quieter problem: nobody can see the portfolio. The information needed to spot a lease approaching a decision point — an option date, an indexation clause that resets next quarter, a classification that no longer matches the facts — exists in the schedules but not in a form anyone reviews between closes. So compliance work is discovered at the deadline rather than managed through the period.