A significant number of companies based in Australia and the wider APAC region are still working towards full compliance with the International Financial Reporting Standards’ (IFRS) 16 lease accounting standards, a new poll has found.
Over 50% of organisations falling short on lease accounting standards
According to poll results released by LeaseAccelerator and RGP, of the 163 executives surveyed, more than 50 per cent admitted their organisations were still working towards full compliance for the new standards set by the IFRS which began to take effect at the beginning of 2019.
A statement from LeaseAccelerator noted organisations are finding “data collection and discount rate determination equally cited as the biggest areas of concern”.
Looking beyond the compliance phase, the software provider noted respondents expect simplified budgeting, forecasting and planning for future lease expenses “to be a key benefit as a result of the enhanced systems and controls being implemented to meet IFRS 16 requirements”.
Commenting on the findings, LeaseAccelerator CEO Michael Keeler said the benefits of IFRS 16 were being realised by companies who had fulfilled the compliance requirements and now enjoy higher levels of visibility and automation from their lease portfolio.
“We call it the silver lining,” Mr Keeler said.
“It’s not just about compliance with the new financial reporting requirements — it’s about efficiency and savings from stronger systems, processes and controls for the lease portfolio.”
Sebastien Normand, VP revenue and country lead Australia at RGP, offered a similar sentiment, noting the key to success was “cross-functional co-operation and good communication”.
“This change impacts the whole organisation and requires lots of communication between accounting, procurement, real estate and operations functions,” he said.
“Once implementation is done, the next step is to have a clear process in place to ensure continuity and accurate and up-to-date information managed by people who are strongly engaged.”