As the deadline to the new lease accounting standards IFRS 16 ASC 842 looms, compliance is at the top of finance managers’ agendas. To comply with the new guidelines, organisations will have to change the way leases are recorded and processed, as the new standards increase complexity, requiring that operating leases now be reflected on the balance sheet as both right of use assets and corresponding lease liabilities. As a result, organisations are allocating significant resources to examining their existing lease contracts, rethinking business processes and the systems used for lease accounting to update the way they manage and account for those leases. Especially time-consuming is the collection of lease contract data to create a single source of truth, with the added complexity of identifying embedded leases and capturing the asset level information for the new GL account balances at transition date. The clock is ticking, the adoption deadline is fixed and at this point organisations need to look for ways to speed up their implementation journey.
Look up to the Cloud and Speed up the Path to ASC 842 IFRS 16 Compliance
Under the new lease accounting standards, automation will be critical as companies will need to have real-time access to accurate lease data to calculate the assets and liabilities to create the disclosure reports. The selected solution should aim to maximise efficiency and cost effectiveness while assuring compliance with the standards; capturing all relevant lease data, integrating with business processes, and presenting accurate and actionable lease-related information for balance sheet reporting. As discussed above, the new standards implementation journey is a labour-intensive, data-driven job that involves a lot of analysis in the audit process to ensure that the right numbers are going to the balance sheet. At this point organisations should avoid adding complexity with the system selection. Instead, look for an “out-of-the-box” solution that can easily integrate with your current ERP and can help to streamline and automate your lease accounting processes. Oracle Financial Consolidation and Close Cloud provides an end -to- end solution that can be easily integrated with any Oracle and non-Oracle source application. This solution permits the creation of a single lease data repository, allowing users to import and input data such as leasing contract information, asset details, fixed and variable lease parameters and end of term options. A comprehensive, consolidated and easily configurable solution that can help streamline and automate your lease accounting processes, from the initial data import to ongoing audit and compliance reporting.
How to Get Real Business Value From Your IFRS 16 ASC 842 Solution
As you look to the Cloud for a complete, fast and cost-effective IFRS 16 ASC 842 implementation solution, great opportunities await for adding real business value to your organisation. Leveraging on an intuitive lease accounting solution like Oracle Financial Consolidation and Close Cloud, and working with the right team of consultants, will optimise and automate your business processes and result in lower operating costs. The new calculations required by the standard offer the opportunity to rethink and streamline the accounting process and speed up the period close. The new single source of truth will give organisations complete visibility of all assets and create more organised financial reporting, opening the door to move towards greater transparency, and better strategic and operational decision making.
How Can VIP Apps Consulting Help?
VIP Apps Consulting team successful experience with Oracle implementation projects, and methodology industry specific to accelerate the transition to the new standards. Our experience in the leasing and financial services industry has positioned us to help your organisation address issues from the accounting interpretation, business process design and optimisation to systems changes and new implementation providing the change management support to address the new lease accounting adoption challenges.
If you have not yet begun, now is the time to contact us and jump-start your IFRS 16 and ASC 842 implementation journey.