Is the thought of another new standard upgrade starting to do your head in? You’ve just barely got through IFRS 15 and now you’re having to think IFRS 16: Leases too?
Transitioning to IFRS 16 is proving to be challenging from a data collection view point. Many companies who have not had a centralised leasing data base are having to collect and capture multiple points of data to provide a view of the transitioning impacts of IFRS 16. Some companies are finding that they have records of certain types of leases, such as property, but then are having to gather data on other leases from different divisions across the business. Remember of course, that the standard scope of a lease encompasses a much broader review of all contracts to determine if there is a lease, even within a possible service arrangement.
The standard allows for a number of transitioning provisions to assist companies through this transition period. Understanding the benefits of these transition options is often hampered by defragmented lease data and can only be fully understood until you have a complete lease database with which to work.
Those entities that have started considering the changes that IFRS 16 will bring to their business processes and reporting have begun to realise that time is running short. With the new standard effective for years ending after 1 January 2019, the companies are now considering budgeting requirements which need to be in place during the current year.
The time to act is now.