Since IFRS 16 and ASC 842 were announced, there's been plenty of focus on the challenges, complexities and negative aspects of implementation. However, little has been said about the main corporate benefits available. 

Bringing more debt on to your balance sheet through adopting IFRS 16 needn’t result in the breaking of covenants with your lenders and whilst loan agreements often contain such financial covenants which the borrow must adhere to so not to be in default of the agreement those covenants are usually calculated according to accounting principles – that is with the possibility that during the loan period new or revised accounting standards may be introduced.

STOP PRESS: If your organisation is likely to deduct more than £2 million in net interest and financing costs when calculating UK Corporation Tax then read on if you want to save time and effort in the treatment of operating type leases under CIR for tax calculation and then IFRS 16 for financial statement compilation.

In a little over 12 months since Innervision’s relaunch of its Corporate social responsibility (CSR) programme, the company has accomplished many interesting, varied and some might say slightly quirky projects.

In this article, we look at how the introduction of the new lease accounting standard – IFRS 16 ‘leases’ will impact disclosures relating to 2019 interim accounts, as well as attempting to clarify some of the more salient requirements, issues and concerns.

Published back in 2016 the new lease accounting standard IFRS 16 ‘Leases’, is effective for all annual reporting periods beginning on or after 1 January 2019.

Recently, Innervision had the privilege of presenting at an IFRS 16 breakfast seminar hosted by one of the ‘Big 4’ auditors.

Whilst previous blogs from us may have looked at the arguments for applying IFRS 16 with a purpose developed software tool and without spreadsheets, here we will analyse, critique and review the arguments against the utilisation of just spreadsheets for such a business critical task – a task which should encompass transition to, and ongoing compliance with IFRS 16, audit trail of lease classification and updates and as importantly lease portfolio management.

IFRS 16 - A quick recap: Whether leasing real estate or more mobile assets there are changes in the way a business will account for its leases under the new accounting standards IFRS 16/ASC 842 which are required to be implemented by your business in time for accounting periods beginning on or after 1st January 2019. 

IFRS 16 specifies how a business reporting under IFRS will recognise, measure, present and disclose leases in its financial statements. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for almost all leases.