#Japan #Survey #Tokyo #Money Forward #Lease Accounting

Money Forward's Insightful Survey on New Lease Accounting Standards

Money Forward, a prominent company in the financial technology sector, conducted a survey between March 11 and March 17, 2025, targeting back-office employees across various sectors. The focus of this survey was to gather insights on how businesses are preparing for the upcoming new lease accounting standards.

Key Findings

The survey unveiled several crucial points regarding organizations' acknowledgment and readiness for the new accounting regulations:

• - General Awareness: Approximately 60% of respondents stated they are aware of the new lease accounting standards. Among these, 16.9% reported a detailed understanding, while 23.5% knew the overview but not the specifics.
• - Progress in Compliance: Nearly 50% indicated that their preparations to comply with the new standards are either nearly complete or ongoing. Despite the mandatory application starting in the fiscal year beginning April 1, 2027, many companies are already in motion.
• - Prioritization of Tasks: Among those making progress, the top priority has been the categorization and organization of lease contracts, highlighting the importance of cleaning up existing contracts as a fundamental step in the compliance process.
• - Projected Completion Timeline: About 30% of respondents expect to complete their adjustments by the end of 2025, with nearly 60% targeting completion in the first half of 2026.
• - Perceived Burdens: A significant 80% of participants reported feeling burdened by the requirements to comply with the new standards, particularly mentioning the effort required in contract management.
• - Systems Utilization: Approximately 90% are utilizing some form of system to manage lease contracts, but challenges such as the coexistence of paper and electronic documents persist.
• - Common Lease Types: The most leased items identified were vehicles, including company cars and trucks, further emphasizing the reliance on transportation assets.
• - Management Challenges: Respondents highlighted that the primary challenge in managing lease information is the handling of paper documentation, followed by mistakes arising from manual operations.
• - System Changes for Compliance: Over 40% revealed plans to replace their current systems for calculating lease liabilities and managing balances, indicating a push towards improved efficiency.

Detailed Insights

The survey delineated specific maturity levels in organizations regarding the new lease accounting standards. The findings confirmed an overall recognition and a proactive approach among businesses. Many are striving to meet the deadlines, showcasing a commendable level of diligence and concern about potential impacts on their financial statements, as these standards significantly alter how leases are reported.

Respondents primarily engaged in accounting, legal, and administrative departments indicated that collaboration across various stakeholders in the organization is crucial, creating additional communication burdens. However, leveraging technology to streamline processes, such as data sharing via cloud systems, can mitigate these challenges significantly.

In commenting on the survey results, Toshi Matsuoka, Group CAO at Money Forward, emphasized that addressing the new lease accounting standards requires considerable effort and multi-departmental coordination is essential to navigate this transition smoothly.

Conclusion

Money Forward's initiative to conduct this survey sheds light on the preparedness of businesses ahead of the rigorous new lease accounting standards. The results underscore the critical need for organizations to embrace digital transformation (DX) to facilitate compliance. By adopting comprehensive management systems, companies not only position themselves to meet regulatory requirements but also improve operational efficiency. The intersection of accounting practices and digital innovation, particularly in harnessing advancements like generative AI, presents new opportunities for enhancing back-office functionalities and overall resilience in the face of changing regulatory landscapes.

This survey was conducted with the participation of 660 individuals from sectors such as accounting, information technology, and corporate governance, reflecting a broad spectrum of insights relevant to the ongoing discussions surrounding lease management and accounting practices in Japan.