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More than half the companies that completed their first audits under the new lease accounting standard needed to make an extra effort, according to a new survey, but the additional work provided more transparency and helped the companies deal with the unexpected crisis of the novel coronavirus, which led to many lease modifications and rent concessions.

The survey, by lease accounting software developer LeaseQuery and CPE provider Encoursa, found that the Financial Accounting Standards Board’s new leases standard, also known as ASC 842, was a challenge during the post-transition audit process. The 240 accountants polled said they identified more cash flow opportunities and enhanced data transparency thanks to the new standard. More than half of the public companies polled (58 percent) discovered embedded leases during their post-transition audit preparation, and 26 percent updated their internal controls for lease terminations and modifications.

The new lease standard puts operating leases on the balance sheet for the first time for many companies. It took effect for public companies at the beginning of last year. It was supposed to take effect this year for private companies and nonprofit organizations, but in response to the COVID-19 pandemic, FASB delayed the effective date for another year (see story). For them, the new standard applies to fiscal years starting after Dec. 15, 2021, and to interim periods within fiscal years beginning after Dec. 15, 2022. FASB’s sister organization, the Governmental Accounting Standards Board, has similarly delayed the effective date of its leases standard for state and local governments.