Accountants across the US are bracing themselves for the significant shift that changes to the ASC 842 accounting standard represents for their profession. When implemented, the new standard will mean that operating leases, previously a footnote to the financial statements, will move onto an organization’s balance sheet, creating a need for accountants to dissect, interpret, and evaluate lease contracts in considerable depth for the first time.
A newly released platform, Trullion, addresses all of the challenges set for the accounting profession by ASC 842. Trullion uses a combination of machine learning and OCR (optical character recognition) to automate the entire lease accounting process. For accounting professionals unsure to what extent changes to ASC 842 will affect their workload, it provides a ready antidote.
With backgrounds in the financial sector, the founding team behind Trullion were fast to recognize the potential of artificial intelligence to solve one of accounting’s biggest conundrums: The requirement to read through hefty contracts, find, interpret, and extract the relevant information before exporting it to financial reports is a job that can be arduous for accountants, but is custom-built for an AI-driven solution like Trullion.
Users of Trullion import their lease contracts in pdf, word, or excel format. The software then uses a combination of AI and machine learning to translate the content of the documents into financial workflows, connected to the data source. The relevant information that Trullion extracts is tagged within the document, with the color of the tagging used to denominate the category of the information: dates, financial, location, or organization (see below).
Categorization of Contract Terms
Each of the tagged items can be reviewed by the user individually (on the left-hand side of the screen) and then approved for the workflow. The software also includes reporting, so every piece of data that has been approved by the user will generate the relevant assets and liabilities entries for the balance sheet. The reporting function also includes journal entries and disclosures, each one allowing the user to filter by reporting period.
Manipulation of Documents
Once the reports have been generated, they can be easily exported into Excel format, and reviewed for accuracy. Any cell can then be clicked on, allowing the user or their auditor to view the formula underpinning numbers, and providing complete visibility of the audit trail. For example, in the case of a weighted average, the auditor could click on the number provided, and gain full visibility of the formula that was used to calculate it.
Links within the reports allow the user to return to the original contract, giving an unprecedented level of transparency into reporting. In the same spirit of transparency, Trullion endows each document with its own timeline, showing all historic modifications to the document, who made the modifications, and what they were. Documents can also be converted into and out of read only format according to the user’s requirements.
Once the reports have been on here, it’s a straightforward process for auditors and others looking over each journal entry to check back on their source. One click on the journal entry brings them straight back to the figure at its source in the original contract. This is something of a game changer for auditors, who, without it, could spend endless hours checking between old contracts and the work flows, ensuring that everything matched up as it should.
Bulk Upload Options
For companies with multiple operating leases, Trullion also offers a bulk upload option. This offers the same functionality as the individual upload feature, with a dashboard that provides full visibility of all of the contracts uploaded. In effect, the more operating lease contracts that a company has, the more this tool comes into its own. Hence, Trullion charges clients on a per-operating lease basis.
Accounting Enters a New Generation
With so much of an accountant’s work ultimately coming down to data entry, tools like Trullion with its Ai powered data entry have the ability to radically impact the accounting profession. As compliance becomes more burdensome, the more likely Trullion and others will be regarded as the standard tools of the trade. Years from now, future generations of accountants may look back and wonder how their industry ever coped without artificial intelligence.