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FASB review: Early vendor input won't solve tech woes, companies say 'build the plane' first

Sept. 29, 2025

Forget early tech vendor input for complex accounting changes, say senior accountants. Companies needed to "build the plane"-define their clear requirements-before technology providers could effectively design systems for the new lease accounting standards. This crucial insight emerged from the Financial Accounting Standards Board's (FASB) recent review of ASC 842, Leases.

The consensus among financial leaders is clear: without precise guidance from preparers, software developers faced an impossible task. "System providers need preparers to tell them what we want the system to do, and then they can build a system," explained Shawn Husband, senior director, ESG reporting at Walmart. He candidly admitted that if implementation costs proved higher than anticipated, it reflected a "preparer feedback problem" - a failure of companies to provide adequate direction.

William Gough, controller & chief accounting officer at NextEra Energy, Inc., echoed this sentiment. He stressed that software developers can only build what they're instructed to, based on the foundational work done by companies. Gough pointed to potential breakdowns caused by "incorrect input from financial statement preparers" who may have misjudged the required changes. "This is more about are we getting the right input and the right feedback from preparers on the effort to implement something, versus a hole in the process," Gough asserted, emphasizing "a quality of information, not an absence of process."

These insights arose during a FASB roundtable discussion on Sept. 12, 2025, focusing on the post-implementation review (PIR) of ASC 842. A FASB senior staff member had questioned whether involving system developers earlier would have been beneficial. The ongoing debate about technology's role in financial standard setting will continue with an advisory discussion scheduled for Sept. 18.

Unforeseen tech challenges and "building on the fly"

While the lease standard aimed to boost transparency by bringing lease assets and liabilities onto the balance sheet, its technological implementation proved far more complex and costly than many anticipated. Large companies, in particular, found themselves navigating an immature software market where solutions were "being built on the fly."

This meant businesses often purchased systems based on future capabilities rather than present reality, leading to multiple implementations as initial solutions fell short. Some preparers even collaborated directly with technology providers, dedicating significant internal resources to refine the software's accounting logic.

Chad Soares, a partner at PwC LLP, highlighted that a "one-size-fits-all" system does not exist. He noted that lease accounting modules are rarely installed as standalone solutions. Instead, companies faced substantial integration efforts with existing data flows, ERP systems, and internal reporting, especially for large, globally operating enterprises dealing with various accounting standards like IFRS and U.S. GAAP. Soares emphasized that the co-development of integration with clients presented a greater challenge than a system provider's initial vision.

A past decision returns to haunt the FASB

The leases standard, a joint effort with the IASB (which issued IFRS 16), took considerable time to complete. Interestingly, the FASB leadership from when ASC 842 was published has since changed. A prior board decided not to establish a leases Transition Resource Group, which might have made a big difference. The reasoning at the time was that the changes were not considered a major accounting overhaul-unlike revenue rules or the credit losses standard that were also released. The assumption was that footnotes on leases would simply move to the balance sheet, with clear rules and no major complexities. This decision, as revealed in the roundtable and other discussions, later proved problematic.

FASB Member Susan Cosper, who was technical director when the leases standard was released in 2016, noted that software providers generally hesitate to commit to development paths until standards stabilize. She questioned panelists:

• Were post-issuance updates (clarifications, easing burden) a detriment or a help to software development?
• How should this be considered when setting effective dates, given software developers' reluctance to commit until standards are final?

Overall, panelists agreed that subsequent revisions were helpful and eased implementation, acknowledging the FASB's active engagement in understanding their impact. These revisions often stemmed from company requests aimed at improving the user experience and facilitating "going live" with the new standards.

The "field study" approach: A better way forward?

Blake Collins, partner at Connor Group LLC, argued that the most effective systems emerge from accountants with practical implementation experience, not just system developers adopting an accountant's perspective. He proposed a "field study" approach, where a limited number of companies implement the standard and provide feedback on challenges. This, he suggested, would be far more beneficial in addressing issues early and improving the standard than relying solely on early input from system providers.

"I don't know how you could develop a system before people have actually gone through the work of doing an implementation or doing lease accounting," Collins stated. "I think the whole concept of a field study... would solve a lot of these issues that kind of have to be revised through ASUs later." He likened it to the "chicken and the egg analogy," emphasizing that a field study would yield greater benefit than early system provider involvement.

Despite the implementation hurdles, participants generally appreciated the new accounting standard, viewing it as a sign of a healthy process. While short-term challenges arose, not having these changes would have resulted in a less effective standard. Gough, for instance, stressed the inevitability of learning during the implementation of comprehensive standards. The resulting adjustments, though impacting software, ultimately led to a superior standard. He reiterated the importance of quality input and feedback from preparers over solely involving software developers earlier in the process.

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