The Easy Way to Handle Dual Financial Reporting Requirements

If your business has leases and needs to comply with dual financial reporting requirements, multi-book for NetLease is a great option that would likely benefit your accounting department.  

It is hard to overstate the difficulty of adhering to dual financial reporting requirements without the proper tools. Manually maintaining multiple books can not only lead to endless hours spent applying different accounting standards, but it also involves endless hours maintaining and formatting to try and ensure data integrity. This manual maintenance is extremely difficult, time-consuming and error-prone. 

One company I worked with was based in the U.S. but also needed to report in IFRS for leases in Germany. It would be a huge waste of time to try and keep a network of excel sheets in sync for these different reporting requirements. It was much simpler to use multi-book enabled software. 

What is multi-book accounting? 

Multi-book is an add-on module within NetSuite that enables customers to report different financial results in multiple sets of financial books to comply with multiple accounting standards. This allows companies to generate financial statements out of the same environment by simply selecting a different accounting book. With multi-book, entries are posted to both accounting books, which eliminates the need to reproduce transactions in each accounting book, resulting in clean financial data across multiple books. Multi-book then provides the ability to make book-specific entries to adjust the financial data within each book.  

Why multi-book for NetLease? 

NetSuite multi-book accounting is especially beneficial for companies that use different accounting treatments due to industry- or country-specific rules. Most of Netgain's customers use multi-book for NetLease to comply with dual financial reporting requirements, which necessitates keeping the primary book under one standard (e.g., U.S. GAAP) and secondary book under another standard (e.g., local government standards). A dual-reporting scenario that many businesses face is having a lease that is classified as an operating lease under U.S. GAAP but as a financing lease under IFRS. Multi-book for NetLease provides a solution to this scenario that helps our customers immensely because they don’t have to worry about the manual maintenance of multiple accounting books. 

How to use multi-book in NetSuite with NetLease 

NetLease uses NetSuite’s book-generic custom transactions, which means if you have multi-book enabled, the transactions will post across all NetSuite books. When you need to adjust the lease transaction in the secondary book, NetLease provides the option to reverse the original NetLease journal entry and repost to the alternate classification (i.e., financing) with a book-specific journal tagged to the secondary book. These transactions are all posted in the same journal entry created in the secondary book. 

See the screenshot below for the normal NetLease Monthly Amortization Entry posted to the primary book. The lease classification is operating, and no changes have been made to this primary book entry: 

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See the screenshot below for the NetLease Monthly Amortization Entry posted to the Secondary Accounting Book. The book-specific journal lines being reversed are prefixed with “REV” in the memo to easily identify the transactions being reversed. The opposite lease classification (i.e., financing) lines follow the normal memo convention.

Bottom Line: 

Using spreadsheets to report to multiple financial books is hard to set up and easy to break. If your company has leases and needs to comply with dual financial-reporting requirements, use Netgain’s multi-book-enabled NetSuite app, NetLease, to report different financial results to multiple books.  

If you would like to use multi-book for NetLease, please contact our sales team at info@netgain.tech.  

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