Case Study: Leases and Lease Management

Context:

A private equity backed manufacturing company with operations in North America and Europe was required to make a last minute adoption of ASC 842 for its upcoming year end. This included an adoption of IFRS 16 for statutory reporting of applicable subsidiaries.

Issue:

The client had no centralized lease repository, nor any internal expertise on lease management. The timeline was tight and the lease portfolio was estimated to be large and widespread. Additionally, the client’s business involved a high probability of embedded leases, with no existing mechanism to identify them.

Solutions:

1. Solaris collected and stress-tested lease data from over 600 leases and service agreements across 20 jurisdictions.
2. We supported the Company in its selection of a lease management system (“LMS”) and lead the implementation of the selected LMS.
3. Solaris formed a steering committee and provided ongoing project management.
4. Created detailed how-to-guides for technical accounting assessments of future contracts, use of the lease management system, and the newly established control matrix supporting ASC 842 financial reporting for day-2.
5. Provided a technical accounting adoption memorandum and the Company’s initial set of ASC 842 compliant financial statements and disclosures, as well as relevant statutory IFRS 16 statements and disclosures.

Results:

Our client was able to feel confident adopting ASC 842 & IFRS 16, and issue its first financial statements under the new standards. The client appreciated Solaris’ focus on involving them every step of the way, as well as the detailed off-boarding training and documentation provided to its staff to support its day-2 requirements.