The deadline to the new leases standards IFRS 16 / FASB ASC 842 is rapidly approaching with tremendous impact and changes to your organisation.
With many lease agreements containing assets scattered around across systems, departments, filing cabinets, etc., which were previously off balance sheet now being brought onto companies’ books, the requirement for new streamlined business processes, along with finance systems investment to track and account for leases has never been so much in focus.
It’s Time to act!
In a previous post, we discussed the strategic considerations for a successful transition plan. Due to be implemented from Jan 2019 (Comparatives Jan 2018), it is the right time to embark and get the project rolling. Because of its implications across the organisation, the project requires a holistic approach where the CFO and Finance Directors work along with their counterparts in IT departments.
Basically, complying with IFRS 16 will need businesses to invest in a significant one-time effort of extracting and collecting contract documentation for leases that need to come on-balance sheet. It is vital for companies to assess whether their current systems need to be upgraded or overhauled to handle the new standard or a new system is required for lease management and accounting.
Here we have a list of questions that will help you assess in which stage of the transition plan your organisation is:
- Have you identified the impact of the new standards on your business and your balance sheet?
- Have you identified your schedule to roll out the new standards and discussed it with your auditors? If not and you plan to start in 2018 do you have a plan to obtain 2018 comparatives?
- Have you identified what categories of leases you have within your organisation?
- Do you have leases with imbedded sub-leases?
- Do you have regular or frequent updates to leases which will impact accounting?
- Do you have all lease details captured in a system today, or have you identified where the data resides and how and when you are going to analyse it?
- Have you prepared your IFRS16 Lease Accounting Policy and reviewed it with your auditors?
- Do you have your new business processes and workflows identified?
- Do you have an application to keep track and record modifications and changes to the lease portfolio? If not, what is your timeline to have the system implemented?
How can VIP Apps Consulting help?
VIP Apps Consulting lease accounting experts is a multi-disciplinary team with extensive experience within the leasing financial services industry with the knowledge, capabilities and operational experience, to help organisations assess and implement the required process and system changes in their transition to the New Lease Accounting Standards IFRS 16 / FASB ASC 842.
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