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Implementation of the new lease standard in 2023 required extensive and painstaking work for government and not-for-profit healthcare organizations across the county. Lease inventories were taken, all related contracts were combed through, evaluations were performed to determine if the standard applied – and those were just the first steps! Wherever the standard did apply to contracts, calculations were started: deciding the lease term, evaluating the likelihood of utilizing any available contract extensions, determining the effective interest rate to use for the amortization schedules.

Here we are, a year later, and it seems this work has been forgotten and we have reverted back to the old way of life. Unfortunately, the lease standard did not go away. The “new normal” of lease accounting need to be maintained. Procedures need to be put in place to ensure all new contracts are evaluated for potential recording and periodic reviews of existing leases need to occur.

What You Can Do:

We recommend facilities implement the following to guarantee compliance with the new standard:

  • Develop procedures to evaluate new contracts for potential leases.
  • Confirm you post monthly entries based on amortization schedules.
  • Develop procedures to review existing contracts on a regular basis (at least annually) to ensure the terms still are correct. Additionally, assess for any lease contracts that have ended or are no longer in place.

This may mean designating someone at your entity (or healthcare organization) to be in charge of all aspects of the standard, incorporating it as part of their duties. For government entities, this person could also support tracking your subscription-based information technology agreements.

If you need help evaluating contracts or setting up amortization schedules throughout the year, please contact us or reach out to your favorite DZA representative. We are happy to help!


– Kami Matzek, CPA, CHFP

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