Also, below is a transcript of the podcast episode:
Jim Hunt: Hello, this is Jim hunt for Bramasol’s Insights to Action podcast series. Today I’m really pleased to have Pete Graham back with us. Pete is SAP’s Director of Finance Solutions and Mobility, and we’re going to talk about SAP Contract and Lease Management, known as CLM, and how it can optimize your lease accounting activities. Pete, it’s great to have you. Welcome.
Pete Graham: Thanks, Jim. Great to be back.
Jim Hunt: Let’s just start off, if you can provide kind of a quick overview of lease accounting changes over the past few years to give us some context.
Pete Graham: Sure. So if we go back a little bit, in 2016 the Financial Accounting Standards Board, also known as FASB and the International Accounting Standards Board, also known as the IASB, announced new accounting standards, which are ASC 842 and IFRS 16. They essentially redefined how organizations must account for leases and they became effective on January 1st, 2019.
In my opinion, the release of these standards was far more than just an accounting change. It was an event that had profound implications on corporations including the digitalization of all leased assets. Their lease-buy decisions certainly could be impacted as well as internal processes for coordination and financial reporting. So it was had a big impact. It was a little broader than most people thought, and SAP has experienced a wide range of requirements related to the lease accounting topic, especially across the different geographical regions around the world. So in our opinion, it’s clear that a sustainable lease accounting solution needs to be flexible and customizable to support a wide variety of customer regional requirements. And this was an important goal in the evolution of CLM.