The new IFRS 16: Leases standard has been issued by the IASB. The core principle of the new standard is that lessees should recognise all leases on their balance sheet.
Areas where you might encounter change
The new pronouncements may not only necessitate updates to existing financial accounting policies, procedures and systems, but also affect controls and contracts. Even if accounting policies are not affected, significant new disclosures and lease management activities are required that suggest the need for planning.
We believe that most companies will need to consider making changes in the following areas:
- accounting policies and disclosures;
- application of judgment and estimation;
- related internal controls that will require updating, if not overhauling, to reflect changes in accounting policies and processes;
- systems to capture, process and maintain new lease data and for ongoing maintenance;
- corporate and other taxes; and
- debt covenant compliance.