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IFRS 16 Leasing Assets and Off-Balance Sheet Financing
The new lease accounting standard – IFRS 16 – will bring all leasing assets on-balance sheet, which may significantly affect companies’ key performance indicators, loan covenants and regulatory capital requirements.
Key takeout from this report
- Do you know which of the entity’s contracts are, or contain, leases?
- Are your systems and processes capturing all of the required information?
- Are systems and processes capable of monitoring leases and keeping track of the required ongoing assessments?
- Have you considered the use of IFRS 16’s recognition exemptions and practical expedients?
- Do you know which transition reliefs are available, and whether you will apply any of them?
- Do you know what discount rates you will be using for your different leases?
- Have you considered the impact of the changes on financial results and position?
- How will you communicate the impact to affected stakeholders?
- Have you planned when you will consider the tax impacts?
- Have you considered whether your leasing strategy requires revision?
How can Deloitte help
With the looming effect of the new leasing standard around the corner, Deloitte has introduced a proprietary tool for leasing. The Deloitte developed technology enhances the extraction of relevant data from lease contracts, maintains and stores historical records, automatically calculates the impact in terms of the requirements of IFRS 16 and generates the financial accounting journal entries for the client’s reporting systems.