Industry Updates

Who is Effected?

In 2016, the Financial Accounting Standards Board (FASB) effectively turned the lease accounting rules upside down. The new rules, which became effective on January 1, 2019, for public companies using a calendar year, are scheduled to be effective for private companies using a calendar year on January 1, 2020.

The changes will significantly affect the financial statements of every company that leases property or equipment, especially those that rely on operating leases (i.e., leases 12 months or less that do not include an option to purchase the underlying asset that is reasonably certain to be exercised).

Important Changes

All leases longer than 12 months in duration must be recorded on the company’s balance sheet. That’s a big change from the current rules, under which operating leases were recorded as a rent expense that didn’t appear on the company’s balance sheet. Under the new rules, with limited exceptions, all leased property or equipment is considered a right-of-use asset and must be recorded as such on the company’s balance sheet.

Similarly, all lease payments are recorded as liabilities rather than operating expenses. This change affects other things as well. For example, interest expenses must be calculated as a cost of the lease and allocated over the term of the lease on a straight-line basis. This affects financial reporting across the board, including calculations for earnings before interest, taxes, depreciation and amortization as well as depreciation and certain tax calculations. The new rules also require additional quantitative and qualitative disclosures designed to enhance the transparency of a company’s financial statements and to allow greater comparability between similar companies.

Note that lease arrangements are contracts that can be structured as part of a larger contract rather than as a separate lease agreement. For example, a master lease can contain different terms for each type of property or equipment in the lease.

In addition, month-to-month leases come under special scrutiny, particularly if the lease is between related parties.

The tests include whether the lessee is

• Depreciating significant improvements to the property for more than 12 months
• The sole user of assets and is paying the lessor to service the debt
• Guaranteeing the lessor’s debt
• Able to relocate without incurring a great expense

Other Considerations

Other important considerations under the new rules include the following:

• The definition of a reasonable useful life for the asset
• Whether the asset has any useful life at the end of the lease
• Who has title to the asset at the end of the lease
• The cost of the asset to the lessor is at the end of the lease
• The lease renewal options (e.g., what if the lease renews annually?)
• What happens if there is no formal lease agreement?

The bottom line is that all businesses must take the time to review all their lease agreements, whether they are separate agreements, contained in a master lease or are part of another contract, and rework how their leased assets are accounted for and reported so they can be in compliance by January 1. The change involves the company’s processes and procedures for recording leased assets.

Copyright ©

Discover our offices for lawyers in Chicago.

Remember how everyone thought the world was going to end on January 1st, 2000? Well, it’s 2018 and we are still here. Just like that daunting day, July 1st, 2018 has come and gone, and everyone is getting used to the Circuit Court of Cook County’s mandatory e-filing system. All jokes aside, after working with Amata members on their e-filing, and thanks to the assistance of various clerks offices, I have gathered some e-filing tips and tricks.

What you need to know before e-filing for the first time.

The Basics

• Each Division has free stations with computers & scanners available to assist with e-filing. My favorite is Law Division.
• All files must be in PDF format. Most documents can be saved in a PDF format from Microsoft word.
• For those who do not have access to Word, visit www.freepdfconvert.com. The site can convert text or image documents for free.
• Many easy to use court forms are also available in PDF at www.illinoiscourts.gov/Forms/approved
• Save changes after each section you enter information.
• If you are trying to print case files from a docket but the clerk’s printer is down, check with another division or even a different floor; they may be able to print the same documents.

Small tricks that will help you e-file with ease

The Nitty-Gritty

• When searching for a case to file into, use the full year. For example: 17 CH 12345 should be searched as 2017CH12345.
• The case number you are filing into should match the case number on the documents you are e-filing.
• Your attorney code should be entered in Case Cross Reference Number.
• If you know there is a fee for your e-filing make sure it says, fee populates at the bottom of your screen.
• All documents should be filed “non-confidential” unless filed under seal.
• If filing under seal, your 1st lead document should be an agreed order from the Judge on the case granting leave to file under seal.

The Illinois courts have been moving towards e-filing – albeit slowly. The original date of January 1st, 2018 was pushed back after Cook County Circuit Court Clerk, Dorothy Brown, and Chief Judge, Tim Evans, filed a joint request to push back the start date a full year. They were granted six months and as of this Sunday, July 1st, the six month extension will have come to a close.

Which means when you come into work on Monday morning, e-filing will be mandatory.

I had the chance to attend a seminar on how to avoid the pitfalls of e-filing back in the winter of 2017, and while I am not an expert on this yet, I collected some quick tips & links for those out there plunging into this sometimes-daunting task.

First let’s start with the good news: Not everything will need to be e-filed.

Below are the four (4) exceptions:

1. Documents filed by an incarcerated self-represented litigant in jail or correctional facility
2. Wills
3. Documents under the Juvenile Court Acts of 1987; and
4. Document in a specific case by court order

If you didn’t catch a lucky break Monday morning, and your documents do not fall under these exceptions, then you will need to create a username and password on the Illinois e-filing site to get started.

• To file in Cook County
• For outside Cook in Illinois

The next step will be to upload a PDF version of your document onto the site.

The size of the document you can upload varies by county and site, so first check with the clerk’s office for size requirements. If your document is too large, don’t fret! You can compress it using this free site.

It is important to have a standard naming convention when e-filing as this helps keep you and the courts organized.

Example: Type-> Description-> Client -> Date
MOT-Extension of Time- Rabiela -091417.doc
LTR-to client re status hearing-Munoz-052317.pdf

Want to make your life easy? There are several service providers that can assist with the e-file process. Attorneys are not required to use a service provider, but there are fees associated with add-on services.

There are strict guidelines on this mandatory process, and by no means is this all you need to know about e-filing. For a more in-depth look at e-filing, visit the Illinois courts site. If you are an Amata member, you can always ask our on-staff paralegals for assistance. Just shoot us an email at [email protected].

Stay tuned as we help guide you through this first month of e-filing. We will be posting quick tips to our Twitter and Facebook throughout the month of July.

From Diana Garcia, paralegal for Amata Law Office Suites

It appears that the Clerk of the Circuit Court was not as ready as they would’ve liked to be for the mandatory e-filing deadline that was to go into effect on January 1, 2018.

Cook County Circuit Court Clerk, Dorothy Brown, and Chief Judge, Tim Evans, filed a joint request to push back the start date a full year to January 1, 2019, stating that their vendor could not fully meet the deadline. The Illinois Supreme Court provided a six-month extension for Cook County to prepare yet again for mandatory electronic filing and has also ordered the following:

April 1, 2018

• The County Division must fully integrate its case management system with eFileIL.
• All civil case types that are not currently e-filed must be able to be filed on eFileIL.

May 1, 2018

• All case types that are currently e-filed using the county clerk’s portal must be able to be filed on eFilelL (includes cases in Chancery, Child Support, Civil, Domestic Relations, Elder Law and Miscellaneous Remedies, Law, and Probate divisions).
• E-filing through eFilelL must be available to all filers across the state, without restrictions.

July 1, 2018

• E-filing of all civil case types becomes mandatory in Cook County.

There are still a few other counties where e-filing is not yet mandatory. The following are the last remaining stragglers: DeKalb, Madison, McHenry, Winnebago (early 2018) and DuPage (July 1, 2019).

Discover our legal support staff for lawyers in Chicago.

From Diana Garcia, paralegal for Amata Law Office Suites

Procrastination. We are all guilty of it at some point in our lives, and attorneys are no exception. As you may or may not know the courts have been moving towards e-filing with January 1, 2018 being the date that this will be mandatory across Illinois. I recently had the chance to attend a seminar on how to avoid the pitfalls of e-filing. While I am not an expert on this yet, I have learned enough to share some quick tips & links for those out there that will be plunging into this sometimes-daunting task.

Not everything will need to be e-filed. Below are the four (4) exceptions:

1. Documents filed by an incarcerated, self-represented litigant in jail or correctional facility
2. Wills
3. Documents under the Juvenile Court Acts of 1987
4. Document in a specific case by court order

You will need to create a username and password to e-file.

To file in Cook County: https://efile.cookcountyuscourts.com/Login.aspx. For outside Cook in Illinois: http://efile.illinoiscourts.gov/service-providers.htm

There are also several services providers that can assist with the e-file process. The below link provides a comparison of some approved vendors. Attorneys are not required to use a service provider, but there are fees associated with add on services.
http://efile.illinoiscourts.gov/documents/Service-Provider-Comparison-Table.pdf

You will need to upload a PDF version of your document.

The size of the document you can upload varies by county and site. Check with the clerk’s office for size requirements. If your document is too large, you can compress it using this free site https://smallpdf.com/compress-pdf.

It is important to have a standard naming convention.

Example:
Type -> Description -> Client -> Date
MOT-Extension of Time- Rabiela -091417.doc
LTR-to client re status hearing-Munoz-052317.pdf)

There are strict guidelines on this mandatory process, and by no means is this all you need to know about e-filing. Please visit the following link for more information:
http://www.illinoiscourts.gov/EBusiness/Electronic_Filing.asp

If you are an Amata member, you can always ask our on-staff paralegals for assistance. Just shoot us an email at [email protected]. Members, be sure to stay tuned for our daily tips regarding e-filing starting Monday, December 18, 2017 through the end of the year.

Discover our legal support staff for lawyers in Chicago.