Few things can increase a commercial real estate professional’s heart rate like a notification related to the Financial Accounting Standards Board. After all, FASB news is often related to sweeping changes that affect the entire industry. Whenever it’s in the news, CRE pros notice.
If you’ve seen FASB in the news recently, you’re not alone. The board is trending again after introducing a proposal on October 6, 2022, that would result in the biggest changes in 25 years when it comes to public disclosure of business expenses.
Why Is FASB Trending?
FASB is trending as the board gauges public feedback to potential changes, which are significant. According to Thomson Reuters, “The board said it is seeking public comment on the provisions, Proposed Accounting Standards Update (ASU) No. 2022-100, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures, which represent the most significant change to segment reporting in 25 years. The proposal would improve the information that investors currently get so that they can track expenses both annually and quarterly in the business segments of a company, units especially that can drain profits and thereby influence stock prices the most.”
How Does This Affect CRE Pros?
The proposal impacts day-to-day lease accounting activities for CRE pros in public companies, especially those in business units that generate revenue. In its current form, here are a few ways ASU 2022-100 would impact commercial real estate professionals:
- All annual disclosures for P/L assets required by Topic 280
- Annual or quarterly disclosures of expenses revealed to the CODM
- Reportable segment categories (“other segment items”)
- Comparative reporting allowed retrospectively
- A single reportable segment for all disclosures in Topic 280
- Accounting for any other reported profit or loss measures
Keeping Track of Updates with CRE Software
Obviously, the above list is not exhaustive and there are several specific limits and guidelines to take into account for your leases. This gets exponentially more difficult as the size of your portfolio increases, which is why investment in the right commercial real estate software is paramount. The good news is that CRE software solutions are more robust than ever, allowing you to easily navigate the latest FASB and lease accounting standards updates. If you’re not sure where to start, we can help you get started with a demo.
Request a demo of Quarem today to see how the tool can help with FASB changes and more.