IFRS 16: the leases standard

Leasing is an important financial solution used by many organisations.  It enables companies to use property, plant, and equipment without needing to incur large initial cash outflows. Under existing rules, lessees generally account for lease transactions either as off-balance sheet operating or as on balance sheet finance leases. The new standard requires lessees to recognise nearly all leases on the balance sheet.
#IFRS16

The new standard requires lessees to recognise nearly all leases on the balance sheet, which will reflect their right to use an asset for a period of time and the associated liability for payments. The lessor’s accounting’ model largely remains unchanged.

Companies need to ensure they are compliant with the new IFRS requirements; most key ratios and KPIs will need to be redefined. The pervasiveness of these rules may require companies to transform their business processes in many areas, including finance and accounting, IT, procurement, tax, treasury, legal, operations, corporate real estate and HR.

The IASB announced the new leasing standard that comes into effect on 1 January 2019. The practical application of this and applying it to the specific circumstances around your business can be challenging. We can help you ensure your financial reporting will be compliant with the leasing standard and manage your lease business and process transformation in an efficient and measured way.

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“While this is an accounting change and doesn’t affect economic position or cash commitments, valuation models will need to be adapted and changes in debt levels communicated to the market and lenders.”

Kirsty Ward, Partner

Helping you implement the new standard

Step 1: Source your lease contracts
Step2: Extract the data for IFRS 16
Step 3: Manage your lease contracts more effectively
Step 4: Run your lease accounting engine
Step 5: Lease reporting
We are helping clients with: 
  • Project planning
  • Structuring as service contracts
  • Data validation
  • Software vendor selection
  • Liability valuation
  • Ongoing process and controls design

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IFRS 16

The leases standard is changing. Are you ready?

Helping you implement IFRS 16: our leasing transition tools

We can help you manage your leases transformation for IFRS 16 in an efficient and measured way.

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Kirsty Ward
Partner, Accounting Advisory
Tel: +44 (0)20 7804 2999
Email

Chris Jackson
UK Accounting Advisory Leader
Tel: +44 (0)20 7804 5622
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