IFRS 16 is the first fundamental change in lease accounting in over a generation.
It reflects a conceptual change that will impact the measurement of performance of all entities reporting in Australia, with varying degrees of impact depending on the nature of the market each entity operates within.
Unlike many other accounting standards, AASB 16 is also not ‘set and forget’. Decisions are required regarding the likelihood of lease extensions on at least an annual basis. If elements of uncertainty are included in lease payments (such as CPI or market price renewals) updates to Right of Use Asset and Lease Liability may be required on a regular basis — typically annually or upon renewal.
As a result, lease accounting is now subject to a complete lifecycle and ongoing maintenance — management can no longer ‘set and forget’ and retain comfort into the future that outcomes remain sufficiently accurate.
Partner & Head of National Assurance QualityContact Merilyn
How we can help
Due to the scope and complexity of the standard, we have developed expertise in delivering a wide range of technical assistance to companies, from educational, to acting as an outsourced provider of expertise, and everything in between.
Resource constraints have also made adoption particularly challenging for lean organisations with large numbers of leases. We can quickly and efficiently provide bookkeeping services to establish lease accounting records and platforms for utilisation into the future.
How we’ve assisted clients
- Quality review of calculations completed by either management or a third party
- Preparation of lease calculations for management, under management direction
- Full implementation projects, including project management, data capture, lease calculations, and provision of white papers
- Drafting of policies and procedures
- One-on-one or group training sessions, including case studies and real-life examples
- Data capture of key lease clauses for rapid data import
- Provision and implementation of in-house software solutions
AASB 16 Software
We developed bespoke and unique software that is available for license by a small-to-medium enterprise. Targeting entities with up to 200 leases, the intuitive and user-friendly software runs on industry-standard back and front ends and allows management to calculate monthly accounting entries, including the impacts of transition, lease modifications and/or pricing changes.
Upon request, you can purchase a license to this software with any other projects. Grant Thornton Australia acts as a reseller for other Grant Thornton International affiliated firms. Support is provided by those affiliated firms.