In case you haven’t heard about the latest release notes published by Oracle, many end users begin to lose basic functions when maintaining rent related transactions. (See: Revised_Oracle_Leasing_solution_to_IFRS16___ASC842 pg56.) For example, Oracle Property Manager disabled the EDIT function to maintain rent payments classified for ASC842 standards. Although the ASC842 compliance is solely directed at ROU/LIAB transactions, end users must create AMENDMENT records when maintain ROU/LIAB transactions. This may not seem like a big deal; however Oracle states an end user must remember the following when creating an AMENDMENT record:
- Amendment commencement date (ACD) cannot go back prior to Booking transaction date.
- Recommended to have ACD of current period for all the other transactions except past dated termination.
- While performing a back dated termination, the new termination date cannot be prior to ACD date.
- Do not use edit functionality to update / make any changes to the lease.
This challenging for even most advanced end-user to know the Booking transaction date prior to creating an amendment record. In fact, the end user must query the transactions in a different form to obtain the Booking transaction date in advance.
The recommendation provided by Oracle is okay assuming the lease record is current, hence not a retroactive lease record.
Then ask yourself if the termination date is prior to the ACD date resulting in organizations be proactive with lease management. Although proactive lease management is ideal, timely execution for a lease is often challenging resulting in a delay to enter a new lease amendment record into Oracle Property Manager.
With these updates, we have been forced to say goodbye to the EDIT function. Quick and easy updates to a lease record must now utilize the lease amendment function.
The above list adds difficulties to using Oracle Property Manager for the end users while other software solutions make it easy to add/terminate rent payments.
Being this is the new status quo, how do you navigate these changes?
- Within Oracle Property Manager you will need to verify the Amendment Commencement Date then create an amendment record for any financial entries. And, if the start date for the financial entry predates the ACD, then further steps may be needed to properly account for the financial entry. Additionally, increased hours may be needed to maintain financial entries given the complexity within Oracle Property Manager.
- Look at other software platforms to simplify business processes when adding/maintaining financial entries.
Ken Royce * Leaseology Inc * Board of Directors
Leaseology, Inc is a North America-based business advisory services firm committed to accelerated marketplace adoption of digital technology, financial management innovation, and business operations practice excellence. These core competencies apply to real estate and equipment portfolios.
