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IBM Smarter Buildings Analytics Helps CFOs Prepare For Major Accounting Shift

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You can tell we’re getting close to the Pulse 2012 event.

Just earlier today, IBM introduced some new analytics software to help CFOs and real estate executives accelerate their preparedness for pending compliance rules for leased assets.

Proposed accounting rules from the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), which are expected to be finalized in 2012, will require a company’s leased assets — real estate, vehicles, other equipment — to be added to their balance sheet as a capital asset.

That means S&P 500 companies would have to list the value of their leases on the balance sheet, weighing them down with an estimated average of more than $1 billion in new assets.

The pending regulation has the potential to dampen their financial performance as expressed in debt/equity ratios and return on assets.

The U.S Securities and Exchange Commission (SEC) estimates that the impact of these changes may approach $1.25 trillion dollars for U.S. publicly traded companies.

Visibility Into Your Leased Assets

IBM’s announcement today centers on issuing new software to help companies manage this major accounting change.

IBM TRIRIGA software has new analytics that delivers visibility into balance sheet and income statement impact; financial assumptions and audit controls for both real estate and equipment leases; and automates management review and approval processes, specifically to help companies navigate the proposed regulation.

The new software also delivers strategic facility scenario modeling to increase return on leased real property assets.

With a global view, the software can:

  • Provide operational controls such as critical date alerts, payment processing and financial assumptions for leased real estate and equipment assets in a single technology platform.
  • Provide balance sheet and income statement analysis of complex real estate lease decisions, such as 10 years with two renewal options versus 20 years, for instance.
  • Help predict future demand for space and display gaps between demand and availability of real estate space.

These types of analytics are critical as an IBM study issued today shows 92 percent of those surveyed believe they are not prepared to implement the pending rules.

The IBM survey, conducted by CFO Research Services, a research group sponsored by CFO Publishing, polled 179 senior executives from global companies with revenue in excess of US$1 billion.

About IBM Smarter Buildings
Since launching its Smarter Buildings initiative in February 2010, IBM has created a portfolio of smarter buildings solutions that integrate with building automation software from across the industry.

IBM’s real-time monitoring and analysis, facilities and space management capabilities, and advanced dynamic dashboards helps property owners and managers reduce facilities operations and energy expense, and improve asset management and reliability.

Through IBM’s acquisition of TRIRIGA, IBM accelerated efforts to bring intelligence in the smarter buildings market. IBM’s smarter building solutions help clients listen to data generated by facilities.

By collecting, managing, and analyzing data IBM helps clients gain intelligence and insight to energy, space and facilities management. TRIRIGA strengthens IBM’s smarter buildings solutions by adding key functions such as real estate, facility and energy management software solutions.

Register to watch this video about these new lease accounting solutions from IBM, and next week, be sure to follow #ibmpulse and #smarterbuildings for some exciting news on smarter building management emanating from the IBM Pulse 2012 event.

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