Commercial Real Estate Pro Network

J Darrin Gross

I'd like to ask you, Lauren Covell, what is the BIGGEST RISK?

Lauren Covell 

The biggest risk in my mind is understating the level of effort required to maintain compliance with ASC 842, a lot of people are just rushing to get implemented under a 842. But really, in my mind, it's a race to the start, that where the going gets tough is maintaining that compliance. And if you don't have those processes established, or if you're not leveraging software, you know, you're going to open yourself up to a lot of risk. And so without, if you can, maybe give the standard a little bit more credit, then you can think about, okay, where do I need to improve my processes? What people do I need, what resources do I need in order to maintain compliance with ASC 842. Because what got you to comply with the old standard is not going to get you where you need to be, as we talked about, there's massive risk in manual error, even if you are certain that everything is accurate, there could be a fat finger, that will be a formula reference error, there are so many things that can go wrong in these massive XML files. And then you have the risk of not interpreting ASC 842 correctly, that if you don't have the technical expertise in house, that's also going to be a pretty big risk. And I think, you know, of course, when you think about the insurance policies, you're never going to absolutely move that risk to someone else besides the finance team or transfer it right. But there are ways that you can mitigate that. And I think the biggest way that you can mitigate is start thinking through your processes. And whether or not you should be leveraging software to help you from a capacity standpoint, really helps you like leaps, make leaps and bounds in your transition to 842. And also, obviously, make sure that you're compliant with everything.