LOS ANGELES—Occupiers are still behind the curve when it comes to implementing the new lease accounting standards, CBRE Group said Tuesday. In a survey of public companies conducted by CBRE and PwC US, 23% of respondents hadn't gotten started, and 52% of those who have begun the adoption process said they're no more than 25% done. The new lease accounting standards from the Financial Accounting Standards Board in the US and the International Accounting Standards Board globally go into effect in 2019 for public companies.

On the other hand, the CBRE/PwC survey does see more focus being trained on this area, with 66% of respondents having formed an internal working group to address adoption of the new standards. CBRE says this is an important first step, since the new standards are of a complexity and degree of nuance that will require greater collaboration and sharing of information between business units.

“The survey results confirm that many public companies, for various reasons, including concentrating on implementing the new revenue recognition standard in 2018, have not been focused on the new lease accounting standards,” says Jeff Beatty, senior managing director of CBRE's Financial Consulting Group and head of its global lease accounting task force. “These companies are now beginning to realize they are only six quarters away from the effective date and that it is time to pick up their pace.”

Forty-seven percent of respondents said that the adoption process has been a bigger effort than they expected. In particular, 75% of respondents said implementation around data collection and systems has been “somewhat or very difficult.” Seventy percent of organizations surveyed are extracting data from their leases manually, while much smaller groups are using third parties (8%), leveraging technology (4%) or requesting data directly from lessor vendors (1%), say CBRE and PwC. Just 3% of respondents overall plan early implementation of the new standards, a figure that underlines the challenges.

“Given the breadth and potential systems and process changes associated with implementing the new standards, companies should consider a phased approach that begins with a current-state assessment focused on lease inventory, processes and data and system capabilities,” says Sheri Wyatt, partner within PwC's capital markets & accounting advisory services practice. “Some companies may be underestimating the time and effort required, but a comprehensive assessment will ultimately provide better clarity around the length and complexity of adopting these new standards.”

Instant Insights /

Lease Accounting Changes: 'Time to Pick Up the Pace'

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