IBM’s TRIRIGA software will help CFOs and real estate executives deal with the upcoming changes to how companies have to account for leased assets. The changes, which are expected to be finalized in 2012, could have a $1.25 trillion impact on publicly traded companies, according to the SEC (News - Alert).

The new accounting regulations would force companies to recognize a leased piece of property, plant or equipment as an asset because they have the right to use the asset even if they do not own the asset. For S&P 500 companies, this means adding an average of $1 billion in assets to their balance sheet, which would be offset by an additional recognition of $1 billion in liabilities for lease payments. The standard was changed to create a uniform way of accounting for leased assets across organizations.

According to IBM (News - Alert), 79 percent of executives anticipate major changes to accounting policies because of the new procedure, and 63 percent of executives expect major changes to information management systems. Sixty percent expect changes to planning, budgeting and forecasting systems, while 49 percent expect new or upgraded business intelligence systems.

“As companies are hit with the new financial regulations, we see that most firms are concerned about their readiness to abide by the lease accounting changes,” said George Ahn, vice president of Enterprise Asset Management, IBM. “We predict that the pending IASB/FASB regulations will spark companies to manage their leased buildings, vehicles and equipment as meticulously as they have traditionally managed their overall financial investment portfolio, with an increased focus on asset efficiency.”

IBM’s TRIRIGA software will deliver solutions for operational controls such as date alerts, payments processing and financial assumptions for leased real estate and equipment assets in the same financial platform. The software will also provide long-term, complex analysis of balance sheet and income statement impact of leasing terms and other conditions. In addition, the software will provide predictions for future demand for space as well as gaps between the availability of and demand for real estate space.

Ninety-two percent of companies, according to IBM, are not ready to implement the changes. “At IBM, we have worked closely with progressive companies to understand the impacts, and are prepared and excited to help companies meet this new need,” said Ahn.