Accounting Standards Codification Topic 842

Transcription

1 Accounting Standards Codification Topic 842 Leases RISK & TRANSACTION ADVISORY MBAFCPA.COM

2 January 2018 Dear Clients and Other Friends, In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No , Leases (Topic 842). This ASU significantly changes how a lessee should account for its lease arrangements by placing both the right to use the leased asset and the obligation to make future lease payments on the balance sheet for almost all leases. The accounting by lessors is also affected by the new standard but the changes are less extensive and are primarily for the purpose of aligning lessor accounting with the new revenue recognition standard and the new accounting model for lessees. The guidance in Topic 842 must be adopted by public business entities in their fiscal year that begins after December 15, 2018, and by non-public business entities one year later. Entities can early adopt the guidance and there may be advantages for lessors to adopt the guidance in Topic 842 at the same time that they adopt Topic 606, Revenue from Contracts with Customers. There are fewer incentives for entities that are primarily lessees to adopt early, but lessees with significant build-to-suit lease arrangements may find it worthwhile to adopt the guidance early. Under limited circumstances by the SEC, certain public business entities would be able to use the December 15, 2019 annual reporting provided that specific criteria are met. Entities that would not meet the definition of a public business entity, except for a requirement to include the organization s financial statements in another entity s filings with the SEC, are permitted to adopt the non-public business entity adoption date. In practice, this effective-date guidance would be granted to an entity that is a significant equity-method investee to an investor that is required to submit SEC filings. This deadline relief applies to the adoption of ASC 842 as well as ASC 606 (Revenue Recognition). The leasing project was a joint project between the FASB and the International Accounting Standards Board. The two Boards ultimately issued similar, but not identical, standards. This newsletter focuses on the FASB s guidance and highlights the key differences between previous Generally Accepted Accounting Principles (GAAP) on leases and the new requirements under Topic 842. We believe that gaining a better understanding of the new standard and performing sufficient planning procedures, in collaboration with your auditors and advisors, will prove to be instrumental when making the necessary updates, which will include changes required in your accounting, process documentation, internal controls, and IT systems. Through awareness of the changes that will be required, you can better ensure that you consider all the necessary steps that will need to be taken. Topic 842 can have a significant impact on companies, especially companies that enter into numerous leases. If you have not started to analyze the impact of the new standard, the time to act is now. We hope that this publication provides you with a convenient summary of the objective of Topic 842, key considerations, and the related impact the guidance will have on lessees and lessors. We look forward to assisting you through the Topic 842 implementation journey. Jesus Socorro Managing Principal - Risk & Transaction Advisory Accounting Standards Codification Topic 842, Leases 2

3 TABLE OF CONTENTS Objective of Topic Key Considerations of the New Lease Accounting Standard... 5 Impact of the Standard on Lessees... 9 Impact of the Standard on Lessors Internal Control Considerations MBAF Risk & Transaction Advisory Can Help...18 MBAF Risk & Transaction Advisory Overview...19 Accounting Standards Codification Topic 842, Leases

4 Objective of Topic 842 The prior framework for lease accounting guidance came from FASB Statement No. 13, Accounting for Leases, which was issued in 1976 (presented in Topic 840 in the Codification). This guidance required a lessee to recognize the cost of operating leases on a straight-line basis over the term of the arrangement and to disclose the amount of future minimum rental payments and other significant features of the lease. However, neither an asset (for the right to use the leased asset) nor a liability (for future lease payments) was recognized on the lessee s balance sheet. This offbalance-sheet financing for operating leases has been the subject of much debate and criticism. In addition, operating leases have been the subject of a number of academic studies over the last 15 years as well as a report issued in 2005 by the U.S. Securities and Exchange Commission (SEC), Report and Recommendation Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 On Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers. These studies and the SEC report reinforced the long-standing requests by many users and others to change the accounting by lessees to recognize the rights and obligations resulting from operating leases as assets and liabilities. The principal objective of the new standard is to improve users understanding of the economic consequences of leases by treating the contractual obligation to make future rent payments as a liability, while acknowledging the intangible asset created by the contractual right to use an identified asset. Specifically, the new standard responds to the off-balance-sheet criticism by requiring lessees to record, on the balance sheet, the assets and liabilities created by leases, regardless of whether they are operating or capital in nature. The initial accounting for both types of leases ( operating vs. capital ) is the same under the new standard; however, the new standard retained the distinction between those two lease classifications for purposes of subsequent accounting. Because the principal concern about lease accounting over the years has been the lessee s accounting for operating leases, the two Boards decided to limit the changes to the lessor s accounting. Furthermore, under the new standard, the accounting by lessors will be aligned with the new model of accounting for lessees and the new standard on accounting for revenue from contracts with customers. Accounting Standards Codification Topic 842, Leases 4

5 Key Considerations of the New Lease Accounting Standard Before we begin to explain the impact that Topic 842 will have on lessees and lessors, it is important to consider certain definitions and terms related to lease accounting. Definition of a Lease When does a contract represent a lease? Under Topic 842, a contract is (or contains) a lease if (1) the use of an identified asset is explicitly or implicitly specified and (2) the customer controls the use of the identified asset for a period of time. Control means that the customer has the right to (1) direct the use of the identified asset and (2) obtain substantially all of the economic benefits during the lease term from directing the use of the identified asset. Accounting Standards Codification Topic 842, Leases 5

6 Lease Classification (Operating vs. Finance) Another factor to consider with Topic 842 is whether leases are classified as operating or finance (capital) leases. If any of the following criteria are met, a lease would be classified as a finance lease: z The lease transfers ownership of the underlying asset by the end of the lease to the lessee z The lease is for the majority of the underlying asset s economic useful life z The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise z The present value of the sum of the lease payments plus any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the leased asset z The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term (this is a new condition as result of Topic 42 that was not included in prior guidance) If the underlying asset is at or near the end of its economic useful life, the lease-term criterion does not apply. In instances where none of the criteria specified above for finance leases apply, the lease would be classified as an operating lease. The difference in accounting between the two types of leases is explained in the Impact of the Standard on Lessors section below. When calculating the sum of lease payments for the purposes of determining lease classification, the following should be included: z All fixed lease payments, less any lease incentives and excluding any non-lease components z Variable lease payments that depend on an index or rate (include in calculation using current index or rate) z Reasonably certain purchase options and renewal options z Maximum amount payable under residual value guarantee When calculating the maximum amount payable under residual value guarantee, for lease classification purposes, only the amount of residual value guarantee that is expected to be paid should be included. If the estimate of the amount expected to be paid under the residual value guarantee changes, the lease liability must be remeasured. Any adjustment of the liability should be recognized as an adjustment to the right-of-use asset. Both operating and financing leases are subject to the existing impairment guidance in Topic 360, Property, Plant, and Equipment for right-of-use assets. Accounting Standards Codification Topic 842, Leases 6

7 Lease Modifications It is critical to consider the impact of lease modifications, as modifications could potentially result in a change in lease classification. A lease modification is defined as any change to the terms and conditions of a contract that results in a change in the scope of a lease or the consideration for a lease. For accounting purposes, a lease modification is treated as a new lease, separate from the original lease, when the following criteria is met. z the lease grants the lessee an additional right-of-use asset not included in the original lease z the additional right-of-use asset is priced commensurate with its standalone price Under these criteria, a modification that extends the term of a lease alone would not be accounted for as a separate lease. Modifications that are not treated as a separate lease based on the criteria above should be recognized immediately. In the event that a lease modification terminates a lease (either partially or fully), the lessee should decrease the right-of-use asset. Depending on whether it causes a partial or full termination, an adjustment should be on a basis proportionate to the partial termination or the full termination of the lease and a gain or loss should be recognized accordingly. Reassessments Under Topic 842, reassessments over lease liabilities are required to be performed continually. This is a significant change from prior lease accounting guidance, which did not include such requirements. As part of the reassessments, lease classification and discount rates should be considered when there is a change in the lease term or the determination of whether the lessee is or is not reasonably certain to exercise a purchase option. Based on the results of the reassessments performed, any increases or decreases in the lease obligation identified will typically be offset by corresponding increases or decreases in the right-of-use assets. The criteria for events and circumstances that will trigger reassessments are described in the Impact of the Standard on Lessees section. Scope and Scope Exceptions Topic 842 does not apply to all types of leases. There are certain types of leases which the new standard addresses, which are considered to be in-scope, and there are other types of leases that are not addressed (out-of-scope). Topic 842 provides guidance for leases related to the following: z Long-term leases of land z Non-core assets z Certain sales with repurchase rights (from the supplier s perspective) Accounting Standards Codification Topic 842, Leases 7

8 The areas of lease accounting that have been excluded from Topic 842, and are considered to be out of scope for the standard, include leases related to the following: z Intangible assets z Assets under construction z Inventory z Exploration for or use of natural resources z Biological assets Based on the types of leases your organization enters into, you can use the scope information above to provide an overall understanding of the number of leases that may be impacted by the new standard. Accounting Standards Codification Topic 842, Leases 8

9 Impact of the Standard on Lessees Lease Assets and Liabilities - New Topic 842 requires that all leases, except for leases with an expected term of one year or less, be recognized on a lessee s balance sheet. A lessee should recognize a liability for the sum of (1) future fixed lease payments over the expected term of the lease (renewal options that are reasonably certain of being exercised are included in the lease term), (2) future variable lease payments that depend on an index or rate (which should be included at the current index or rate), and (3) the probable amount of any residual value guarantee. In addition, the liability should include any amount payable upon the transfer of title to the leased asset or the amount of any bargain purchase option. All future payments should be discounted at the interest rate implicit in the lease, if this rate is known to the lessee, or, if the rate implicit in the lease cannot be readily determined, the lessee should use its incremental borrowing rate. The following inputs are necessary to compute the rate implicit in the lease: z Fair value of the underlying asset at lease commencement z Lease payments z Initial direct costs that would not have been incurred if the lease had not been executed (excluded for sales-type leases with selling profit or loss) z Value the lessor expects to derive from the underlying asset following the end of the lease term During the December 5th conference highlights, the staff of the SEC s Office of the Chief Accountant (OCA) discussed a lessee s consideration of the remaining minimum rental payments for arrangements previously accounted for as operating leases. The guidance in ASC 842 requires the lessee to initially measure the lease liability using the remaining minimum rental payments (as defined by ASC 840). Questions were raised by the OCA staff as to whether the lessee s initial lease liability should include or exclude the portion of the fixed, gross rental payments that represent executory cost (insurance, maintenance and/or taxes). It was noted that under current GAAP, some lessees exclude executory cost from the minimum lease payments while others account for the entire rental payment as a minimum lease payment. Although registrants argued both approaches, the OCA noted that the term minimum rental payments is not explicitly defined under the current ASC 840 guidance. As such, the OCA did not disagree with registrants consistently applying their historical accounting policy conclusion regarding the classification of minimum lease payments when concluding on executory cost considerations. Additionally, the OCA staff discussed the incremental borrowing rate a lessee should apply. The transition guidance indicates the lessee should measure the lease liability using the discount rate, which is recognized as the beginning of the earliest period presented in the financial statements or the commencement date of the lease, if later. However, such guidance does not indicate if the discount rate should be based on the original lease term or the remaining lease term. Accounting Standards Codification Topic 842, Leases 9

10 It was noted that some registrants agreed that the lessee should select the original lease term discount rate, as they concluded that it better reflects the borrowing rate embedded within the contract when the lessee entered into the arrangement. Other registrants argued the lessee should select the remaining lease term rate, as they believe the rate better suits the rate applicable to the remaining lease liability recognized in transition. The OCA staff indicated that the transition guidance is not specific with respect to the lease term that should be used to determine the discount rate. Furthermore, OCA noted that either rate used may considerably differ from the rate that would have been determined at the commencement of the lease. The OCA staff concluded that either of these rates is acceptable and ultimately did not object to a registrant s consistent application of either approach to determine the lessee s lease liabilities in transition. Non-public business entities can elect to use the risk-free rate, if desired The amount initially recognized for the right-of-use asset should be the amount of the lease liability adjusted for any lease incentive received or receivable, any lease payments made prior to the beginning of the lease term, and the capitalization of any initial direct costs of obtaining the lease. Right-of-use assets can include separate units of accounts if both of the following factors apply: z The right to use is not highly dependent on, or highly interrelated with, other rights to use underlying assets specified in the contract z The lessee can benefit from the right to use the asset either on its own or together with other resources that are readily available to the lessee Based on the criteria above, land, as an example, can be classified as a separate unit of account. Some lease contracts (or contracts that contain an embedded lease) have both lease components (the value related to the right to direct the use of an identified asset) and non-lease components (for example, the value of operation or maintenance activities related to the leased asset that will be performed by the lessor). For purposes of identifying future lease payments, the lease and nonlease components should be bifurcated based on the standalone price of each component. Only the lease component is required to be included in future lease payments. However, if a lessee so elects, it is allowed to forego bifurcating the payment and to include both the lease and any nonlease components in the computation of its lease liability. Differences in Accounting for Operating Leases vs Finance Leases - Topic 842 continues to require lessees to classify leases as either operating or financing. Topic 842 adds one condition to the four conditions we use today when determining whether a lease is operating or financing: If the leased asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term, the lease should be classified as a finance lease. Although the lease liability and lease asset are measured the same way at the beginning of the lease for both operating and financing leases, the subsequent accounting for the two types of leases is quite different. Finance leases give rise to two discrete expenses, depreciation (or amortization) and interest, with the amount of interest recognized each period declining as the lease liability is reduced by lease payments. In contrast, operating leases give rise to one expense, rent, that is recorded straight line over time. Accounting Standards Codification Topic 842, Leases 10

11 To address Topic 842, the lease liability for an operating lease is amortized using the interest method (just like the liability for a finance lease), but the amortization of an operating lease rightof-use asset is a plug (normally an increasing amount of amortization over the term of the lease) to arrive at the expense amount recognized in the income statement. When lease payments for an operating lease are level, the right-of-use asset is reduced each period by the same amount as the liability. In contrast, a finance lease is accounted for similar to today s capital lease: The lease liability is amortized using the interest method and the right-of-use asset is amortized on a straightline basis with both interest expense and amortization expense separately recognized in the income statement. Because the subsequent accounting for operating and financing leases is so different, the FASB decided that lessees should not combine either the lease liabilities or the right-of-use assets of their operating and financing leases on their statements of financial position. As mentioned in the Key Considerations of the New Lease Accounting Standard section above, Topic 842 requires lessees to continually reassess the lease liability for both operating and finance leases. The reassessment is required to be performed if either of the following is identified: z a change in expectation about the exercise of a purchase option or a renewal option due to a significant event or a significant change in circumstances that is within the control of the lessee, or z a change in the amount expected to be paid under a residual value guarantee, the lessee will need to adjust the amount of its lease liability with the offset normally to the right-of-use asset Based on the reassessments performed, the lease liability and related right-to-use asset balances should be adjusted accordingly. Accounting Standards Codification Topic 842, Leases 11

12 Build-to-Suit Leases - Under prior GAAP, lessees sometimes found themselves required to account for a leased asset as if the lessee was the owner of the leased asset. These build-to-suit lease arrangements were required to be recognized by the lessee as if the lessee was the owner based on whether the lessee is deemed to be exposed to too much risk related to the leased asset during its construction phase. Topic 842 changes the build-to-suit criteria and applies a control-based model. That is, only if the lessee controls the leased asset during its construction phase is the lessee required to account for the project as if the lessee was the owner of the project. Sale/Leaseback Transactions - Topic 842 simplifies the accounting for sales and leasebacks of assets. Prior GAAP had a number of conditions that must be met to account for the sale and leaseback of real estate as a sale and a lease but had few conditions for the sale and leaseback of assets other than real estate. Topic 842 eliminates the differences between sales and leasebacks of real estate and sales and leasebacks of other assets. Accordingly, the nature of the asset being transferred does not affect the accounting. What s relevant is whether the transaction meets the criteria to be recorded as a sale and whether the lease is a finance lease or an operating lease. If the transfer of an asset meets the conditions in Topic 606, Revenue Recognition, to be accounted for as a sale and the lease is classified as an operating lease, then the transaction would be accounted for as a sale and a leaseback of the asset. Under Topic 606, a transfer of an asset is not a sale if the transferor has an option to repurchase the asset. Accounting Standards Codification Topic 842, Leases 12

13 Accordingly, if a seller-lessee of an asset has a repurchase option, the transaction is accounted for as a borrowing by the seller-lessee and a loan by the buyer-lessor with one exception. An option to repurchase an asset at fair value at the time the option is exercised when there are alternative assets, substantially the same as the transferred asset, readily available in the marketplace does not preclude sale and leaseback accounting. If the transfer of the asset is not a sale or the lease is a finance lease, the transaction is accounted for by the lessee as a borrowing and the lessor as a loan. Under prior GAAP, losses from sale and leaseback transactions were immediately recognized in income while gains were generally deferred and amortized. Under Topic 842, both gains and losses (after adjusting for any off-market terms) are immediately recognized in income. Accounting Standards Codification Topic 842, Leases 13

14 Impact of the Standard on Lessors Lessor accounting under Topic 842 is similar to prior GAAP with the following key differences: z Topic 842 eliminates the differences between leases of real estate and non-real estate assets. For example, under Topic 842 it is possible for a lessor to qualify for sales-type lease accounting for a lease of real estate without a transfer of title. z Topic 842 eliminates the use of leveraged lease accounting, which is currently applied to lease agreements that are partially financed by lessors through a third-party financial institution. However, it grandfathers all existing leveraged leases. z Topic 842 requires accounting symmetry between the accounting by a seller-lessee and a buyer-lessor in a sale and leaseback transaction. That is, if the transaction is accounted for as a borrowing by the seller-lessee, then the buyer-lessor accounts for the transaction as a loan. z Topic 842 requires a lessor to continue to consider any residual value guarantees when classifying a lease, but a residual value guarantee received from other than the lessee, in and of itself, cannot result in a lease being classified as a sales-type lease. In addition to the differences for lessors noted above, Topic 842 handles collectability issues and uncertainty about future unreimbursable costs differently than prior GAAP. Under prior GAAP, if the collectability of the minimum lease payments is not reasonably certain, the lessor classified the lease as an operating lease. Under Topic 842, if the lease would otherwise be classified as a direct finance lease but the collectability of the minimum lease payments is not probable, the lessor classifies the lease as an operating lease. Accounting Standards Codification Topic 842, Leases 14

15 If the lease would otherwise be classified by the lessor as a sales-type lease but the collection of lease payments is not probable, the transaction would be recognized and measured in accordance with the new revenue recognition guidance (that is, a sale would not be recognized and any cash received would be recognized as a deposit liability until collection of the lease payments becomes probable). Under prior GAAP, when there is important uncertainty about future unreimbursable costs, the lessor classified the lease as an operating lease regardless of the outcome from the four conditions used by a lessee to classify the lease (that is, transfer of title, bargain purchase option, lease term for a major part of the useful life, and the present value of minimum lease payments equaling or exceeding substantially all of the fair value of the leased asset). Under Topic 842, uncertainty about future unreimbursable costs does not change lease classification. Consequently, under Topic 842, a lessor with a lease that has primarily variable lease payments (for example, a wind farm lease) that meets the conditions for classification as a sales-type lease always recognizes a loss at lease commencement and then recognizes rental income over the term of the lease as the variable lease payments become payable. Accounting Standards Codification Topic 842, Leases 15

16 As the impact of Topic 842 over the accounting for both lessees and lessors differs, so does the impact over their respective disclosures. Below is a table which highlights what should be disclosed, both qualitatively and quantitatively, by lessees and lessors as part of the new lease accounting standard. Proposed Guidance The Board has proposed an accounting standards update that will provide transition relief as it relates to comparative reporting at adoption. The proposal provides for an optional transition method that would allow entities to opt to continue applying ASC 840 in comparative periods. Furthermore, the Board has proposed amendments to ASC 842 on land easements and will issue a final ASU clarifying the accounting. We will update this publication once these proposed standards are finalized and with other relevant standard-setting developments. Accounting Standards Codification Topic 842, Leases 16

17 Internal Control Considerations With leases moving onto the balance sheet, an increase in the level of scrutiny given to the underlying lease data is expected, especially due to the Sarbanes-Oxley compliance (SOX) implications for public business entities. Entities need to be prepared for changes to their compliance and internal control over financial reporting (ICFR) processes as a result of the new standard. Entities should expect enhanced focus to be given by regulators and auditors alike over the identification of data sources, completeness and accuracy, and workflow process documentation. As part of the implementation process, entities should perform an assessment over their established internal controls to identify gaps brought on from the proposed implementation of the new standard or any modifications required to existing controls. Registrants are required to disclose any material changes in their ICFR in a Form 10-Q or Form 10-K in accordance with Regulation S-K, Item 308(c). Accordingly, registrants will need to be mindful of these disclosure requirements when establishing new controls. Entities should develop a roadmap for control implementation, complete with timelines and milestones evaluating the design and for testing the operating effectiveness of proposed controls. Along this entire process, communication with and involvement of external auditors is essential. Accounting Standards Codification Topic 842, Leases 17

18 MBAF Risk & Transaction Advisory Can Help Taking the necessary steps to ensure compliance with the new lease accounting standard can be a burdensome task for management teams, considering their existing day-to-day activities. For this reason, MBAF can assist you with performing a tailored assessment to identify the required changes for your organization, and can assist you with making the necessary changes. As part of our assistance related to Topic 842, we can perform the following tasks to help you ensure compliance with the new standard: Validate existing lease accounting treatment z Hold workshops with management teams and review existing lease policies and procedures to assess the current state of records z Gather all lease-related information available, including related system reports and spreadsheets z Validate system reports and spreadsheets related to leases and agree them to supporting lease agreements to ensure completeness and accuracy Identify changes required to address Topic 842 z Differentiate between which types of leases will be impacted under Topic 842, (in-scope vs. out-of-scope) z Review accounting treatment of existing leases in scope (operating vs. finance) z Perform a detailed gap analysis to identify changes that will be required under Topic 842, including IT considerations Facilitation assistance z Create an implementation roadmap to address gaps noted z Propose related journal entries required to correct account balances z Hold training sessions with appropriate personnel to ensure consistent application of the new standard on a go-forward basis z Update process documentation and policies related to lease accounting z Evaluate impact of Topic 842 on internal controls and add/revise control descriptions where needed Post adoption support z Provide on-going support to address any issues or questions that arise z Perform reviews over lease accounting treatment for newly entered leases post adoption z Perform testing of any new or updated internal controls related to Topic 842 z Perform reviews of financial statements, 10-Qs, or 10-Ks post adoption to ensure appropriate lease accounting treatment and disclosure Through the suite of services we offer, we can help you successfully adopt the new lease accounting standard and help you ensure compliance going forward. Our methodical approach to address Topic 842 creates minimal disruption for organizations while yielding effective results. Accounting Standards Codification Topic 842, Leases 18

19 MBAF Risk & Transaction Advisory Overview MBAF s Risk & Transaction Advisory team is comprised largely of former Big 4 professionals (CPAs, CISAs, MBAs). As a seasoned, accessible, and well-coordinated team, we execute efficiently and with a high level of quality. We have extensive experience with highly complex, technical accounting matters. We have worked successfully with all of the Big 4 firms and other large audit firms, including working with their respective national offices. Our experience encompasses a wide spectrum of projects ranging from assisting emerging growth companies with accounting consultations and policy writing, to large-scale Fortune 500 global internal control projects with complex coordination and execution efforts. Our high quality, dedicated Risk and Transaction Advisory team has meaningful SEC and PCAOB experience. Knowledge sharing and development are integral to our service delivery. Our investment in knowledge helps our engagement teams operate more efficiently and effectively, and we actively seek opportunities to share that knowledge and thought leadership with your management team. We manage our time in ways that are costeffective to produce value for you, which we believe is derived from: z The unparalleled advantage provided by our team s unique set of skills and experiences from the viewpoint of the external auditor z Significant synergies and collaboration with your external auditor, which allows for maximum leverage of our work in preparation for the external audit z Proactive sharing of relevant and practical thought leadership z A strong, deep bench of professionals, including subject matter resources (IT, valuation, tax, litigation and others) MBAF s Risk & Transaction Advisory practice creates value for emerging growth, mid-cap, and Fortune 500 companies. CONTACT: Jesus Socorro Managing Principal - Risk & Transaction Advisory Jsocorro@mbafcpa.com Keith Urtel Principal - Quality Control Leader Kurtel@mbafcpa.com Lazaro Gutierrez Principal Lgutierrez@mbafcpa.com Miguel Velasquez Principal Mvelasquez@mbafcpa.com Farhan Naviwala Director Fnaviwala@mbafcpa.com Emma Florea Director Eflorea@mbafcpa.com LOCATIONS: Miami Coral Gables Fort Lauderdale Boca Raton Palm Beach Orlando z Technical accounting z IPO readiness z Sarbanes-Oxley z SEC reporting z Process improvement z IT Risk z Enterprise risk management Naples New York City Valhalla Baltimore Boulder Las Vegas India Accounting Standards Codification Topic 842, Leases 19

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