The Interview: Lease chaos unraveled
Accountant Greg Kautz on how to work smarter
By Janet Berry-Johnson | for Net Gains
Lease accounting isn't exactly the belle of the financial reporting ball. But it's got teeth, and ignoring it can cost your clients big. This week we sat down with Greg Kautz, CEO and Co-Founder of Black Owl Systems, who brings over 40 years of accounting and software expertise to the table.
From buried spreadsheets to judgment call headaches, Kautz breaks down the real challenges behind ASC 842 and IFRS 16 and how automation can turn lease chaos into clarity.
— Bianca Prieto, Editor
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What are some common challenges accountants face when helping their clients implement the lease accounting standards?
One of the biggest challenges is gathering complete and accurate lease data. Lease records are often spread across multiple spreadsheets with inconsistent formats and broken formulas. We frequently find calculation errors and mismatches between contractual terms and recorded start or end dates.
Accountants also face difficulty interpreting contract language, particularly when it involves variable payments, options or embedded leases. Applying the standards correctly requires judgment calls that can materially impact financial reporting. Compounding this, many clients underestimate the effort required to remain compliant after initial adoption. They often defer ongoing changes, reassessments and modifications until audit time, creating added pressure.
How can automation tools help firms streamline lease accounting workflows and reduce the risk of errors or audit findings?
Automation is essential for reducing manual effort and avoiding errors, especially as lease portfolios become larger or more complex. A solution like Black Owl standardizes data capture, ensures consistent accounting treatment and automates complex scenarios such as reassessments, modifications, multi-currency transactions and support for multiple accounting standards.
Our goal is to eliminate the need for manual journal entries entirely. The system produces audit-ready reports and journal entries that tie directly to financials, minimizing reconciliation time and back-and-forth with auditors. For accountants, it means fewer surprises, better accuracy and more efficient workflows, whether they are managing ten leases or a thousand.
For smaller firms or clients who don’t have dedicated lease accounting staff, what’s a realistic starting point for getting lease records in shape under the lease accounting standards?
Start by identifying all active leases and collecting key terms, such as start and end dates, payment amounts and renewal options, and enter them into a structured format.
Even a simple spreadsheet template can help clarify scope and readiness. From there, using a system that handles the accounting logic behind the scenes can save significant time and reduce the risk of error. Many smaller teams begin by loading their legacy spreadsheets into Black Owl. Our guided onboarding and support make the process easy, even for those without lease accounting experience, helping them move from compliance risk to confidence quickly.