GASB 87 moved government lease accounting from scattered operating expense treatment to a single right-to-use model. Municipal leaders must identify lease terms, measure liabilities or receivables, disclose future payments, and sustain audit-ready records. SmartFusion can help finance teams centralize assets, purchasing, reporting, and controls before auditors ask for proof.

The Discipline of Lease Accountability

GASB 87 is not just an accounting update. It is a test of public stewardship.

The standard says a lease is a contract that gives control of the right to use another entity’s nonfinancial asset, such as land, buildings, vehicles, or equipment, for a period of time in an exchange or exchange-like transaction. Under GASB 87, leases are treated through one core idea: they are financings of the right to use an asset. Lessees generally recognize a lease liability and an intangible right-to-use lease asset. Lessors generally recognize a lease receivable and a deferred inflow of resources.

That changes the burden on local government. A lease can no longer sit quietly in a drawer, known only to one department and one staff member.

Finance must know the term. Procurement must know the contract. Departments must know the asset. Auditors must see the trail.

Budgets are tight. Timelines are shorter. Citizens expect more.

The Work Before the Audit

GASB 87 asks municipal leaders to turn lease knowledge into repeatable practice. The standard requires attention to lease terms, extension and termination options, short-term lease treatment, future payments, modifications, and disclosures. It also includes a short-term lease exception for leases with a maximum possible term of 12 months or less.

A practical city or county response should be direct:

• Inventory every lease across departments.
• Separate short-term leases from reportable leases.
• Confirm lease terms and renewal options.
• Track payment schedules and interest.
• Connect lease records to assets, vendors, and funds.
• Prepare disclosure support before year-end.

This is where friction appears. We know the weight of legacy systems; we understand the cost of the status quo. Lease data may live in spreadsheets, email, scanned contracts, purchasing files, or department memory. That is not a process. That is a risk.

The goal is simple: a record that is complete, a calculation that is defensible, and a disclosure that is ready.

How SmartFusion Helps With GASB 87

SmartFusion supports municipalities with integrated financial management, fund ledger, budgeting, accounts payable, bank reconciliation, fixed assets, purchasing, project reporting, and reporting tools. Its knowledge overview states that the platform supports GAAP, GAAFR, and GASB standards, with full module integration.

For GASB 87, that matters because compliance is not one event. It is a chain of custody.

SmartFusion can help finance teams strengthen that chain through:

1. Fixed Assets: Track assets, monitor status, and calculate depreciation across accounts and fund sources.
2. Purchasing: Manage purchase orders and connect activity with Fund Ledger, Accounts Payable, and Inventory.
3. Reporting: Use built-in reporting and SmartQuery to create custom reports for analysis, audit support, and sharing.
4. Fund Ledger and AP integration: Keep lease-related financial activity tied to the broader accounting system.

A city that knows its leases. A city that trusts its records. A city that meets the audit with evidence, not anxiety.

GASB 87 rewards governments that bring order to obligation. SmartFusion helps municipal leaders turn that order into daily discipline, and daily discipline into public trust.