Healthcare Financial Management Association Releases Lease Accounting Guidance


Washington, D.C., June 24, 2020 (GLOBE NEWSWIRE) -- The Healthcare Financial Management Association (HFMA) has published an issue analysis, “Current Issues and Considerations in Accounting for Leases,” to clarify certain accounting and reporting issues resulting from the Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-02, “Leases (Topic 842),and the Governmental Accounting Standards Board (GASB) Statement No. 87,“Leases,” as they apply to the healthcare industry. Due to the magnitude of lease transactions in healthcare, these accounting guidance changes will have wide-reaching impacts.  

As detailed in HFMA’s Issue Analysis, FASB disclosure requirements have increased significantly for both lessees and lessors. For lessees, virtually all leases must be reflected on the balance sheet. Lessees are required to report both operating and finance leases with a term of more than one year. A dual classification model is retained for the income statement. For lessors, the accounting model is fundamentally equivalent to existing guidance, but lessors will need to consider the timing implications of the new revenue recognition standard. Effective dates for different types of entities vary. FASB offers two methods to recognize and report leases; one includes adjusting comparative periods.

The GASB changes establish a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Lessees that report under GASB standards must reflect virtually all leases on the statement of net position, reduce lease liability as payments are made, and recognize a resource outflow for interest on the liability. Lessors should recognize a lease receivable and a deferred inflow of resources when the lease term begins and recognize revenue systematically. Both lessees and lessors should include  certain information in the notes to financial statements.

The HFMA Principles and Practices Board’s 15-page issue analysis is designed to provide guidance to healthcare entities as they work through their implementation plans for the new FASB and GASB standards and apply them to their own leasing arrangements. It includes sections on developing a roadmap to implementation, overcoming challenges, and starting the implementation process for the new standards. Appendices provide examples of recording finance and operating leases under the new standards. The issue analysis may be viewed at hfma.org/principlesandpractices

Principles and Practices Board issue analyses are published to provide short-term practical assistance on emerging issues in healthcare financial management. Issue analyses are factual, but nonauthoritative. To expedite information to the industry, issue analyses are not sent out for public comment. Additional interpretive guidance may be released as circumstances evolve. Consultation on these matters with independent auditors is highly recommended.

About HFMA  

The Healthcare Financial Management Association (HFMA) is the nation's premier membership organization for healthcare finance leaders. HFMA builds and supports coalitions with other healthcare associations and industry groups to achieve consensus on solutions for the challenges the U.S. healthcare system faces today. Working with a broad cross-section of stakeholders, HFMA identifies gaps throughout the healthcare delivery system and bridges them through the establishment and sharing of knowledge and best practices. The Association helps healthcare stakeholders achieve optimal results by creating and providing education, analysis, and practical tools and solutions. Its mission is to lead the financial management of health care.

 

Coordonnées