Boost your lease management and ensure IFRS 16 compliance with advanced Lease Accounting solutions
For many finance teams, spreadsheets have long been the go-to tool for managing lease accounting. Excel's flexibility and familiarity have made it a convenient choice for handling various financial tasks, including compliance with new standards like IFRS 16 / AASB 16. However, this reliance on spreadsheets can lead to significant challenges, especially when an organisation faces an audit.
While using Excel for IFRS 16 compliance may seem like a practical solution for many finance teams, it comes with significant pitfalls, particularly as the complexity of the business increases. Audits can expose these pitfalls, revealing issues such as balance sheet errors, data inconsistencies, lack of integration, and inadequate audit trails.
In this blog, we'll identify five signs that indicate it's time to upgrade from Excel to dedicated lease accounting software. Understanding these signs can help you enhance your lease management processes and ensure IFRS 16 compliance.
Five signs that tell you it's time to invest in lease accounting software
Do any of these scenarios sound familiar?
1: Dependence on individual expertise
Building and maintaining efficient Excel spreadsheets is often limited by the capabilities of the individual who creates them. This dependency poses significant risks, as critical knowledge may be lost if that person leaves the organisation. Lease accounting software offers standardised processes, comprehensive documentation and ongoing support and training, ensuring continuity and consistency irrespective of personnel changes.
2: Challenges in troubleshooting and reviewing
Excel spreadsheets, especially complex ones, can be notoriously difficult to troubleshoot, navigate, and review. Errors can be hidden within layers of formulas and links, making it hard to identify and correct mistakes. Lease accounting software, designed specifically for IFRS 16 and lease management, simplifies troubleshooting with intuitive interfaces and built-in error-checking mechanisms, ensuring data accuracy and reliability.
3: Lack of critical controls and data integrity
Excel lacks the robust controls necessary to preserve the integrity of data. A spreadsheet only captures a single point in time. Therefore, spreadsheets are vulnerable to both deliberate and accidental changes, which can lead to significant errors that are difficult to trace and rectify. Lease accounting software provides in-built control measures, including audit trails, user permissions, and automated validation checks, ensuring data integrity and compliance with IFRS 16.
4: Manual processes and high maintenance
Managing lease accounting with Excel requires extensive manual processes, from data entry and formula creation to backup and disaster recovery. This not only increases the workload but also heightens the risk of errors and data loss. Not only that, but time and resources are wasted when staff have to redo their IFRS 16 calculations, followed by their managers having to repeat their reviews. Lease accounting software automates many of these processes, reducing the need for manual intervention and minimising the associated risks. Features such as bulk data uploading, automated event notifications and multi-currency support streamline operations and enhance efficiency.
5: Auditing and compliance challenges
Tracking changes in Excel is challenging, which can be a problem during audits. It can be difficult, identifying who made changes, when, and why they were made. This lack of transparency can complicate compliance with IFRS 16 and other standards. Additionally, audit costs increase if the auditor has to repeat their checks of IFRS 16 calculations. Lease accounting software offers detailed audit trails and comprehensive reporting capabilities, facilitating easier compliance and smoother audits.
If any of these signs ring a bell, you're already aware of the limitations of using Excel for lease management, and you'll have been curious about the benefits of investing in innovative, purpose-built lease accounting software. When you make the decision to upgrade, you'll not only ensure compliance with IFRS 16 but you'll also improve your overall efficiency and data accuracy, providing a solid foundation for effective and strategic lease management.
The future of lease accounting
Making the move from Excel to dedicated lease accounting software can significantly enhance your organisation's lease management capabilities. While Excel might seem like a convenient and cost-effective solution, its limitations become apparent as lease portfolios grow and compliance demands increase.
Lease accounting software provides robust controls, automated processes, and comprehensive reporting, ensuring data integrity and compliance with IFRS 16. It mitigates the risks associated with manual data handling and troubleshooting, while also facilitating smoother audits and better decision-making through advanced analytics and real-time insights.
By investing in specialised lease management software, your organisation can streamline operations, reduce errors, save money, and focus on strategic initiatives rather than being bogged down by the complexities and pitfalls of spreadsheet-based accounting.
If you'd like more detail, download this comparison sheet - it's an evaluation of our Lease Optimisation Information System (LOIS) against Excel.
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