Companies are facing a major challenge to implement and comply with the new lease accounting standards of IFRS 16. Financial statement managers have to extract an extensive amount of lease data, spend long periods of time to read and analyze obligations and provisions and modify it according to the latest standards.

Smooth and efficient transition is only possible through a proper understanding of the complex transition components and simplifying the implementation process. Additionally, you must leverage lease accounting software and lease management software offering great value and solution. 

Furthermore, experts in the leasing industry suggest these 7 steps for the transition to new lease accounting standard IFRS 16 without much hassles. 

Plan in Advance

Plan in advance before you begin the process of implementing the new lease accounting standards. Evaluate the existing processes, time, resources, and systems which will be the key to avoid unnecessary complexities and offer flexibility. Decide which transition approach to follow based on implementation cost and comparability.

Education and Awareness

Educate and make aware of the new lease accounting standards and how it is going to impact the business. Give comprehensive training about the process, how new lease standards affect the financials, and be clear about the desired output or objective. Ensure team members understand new lease standards thoroughly and work on any complexities at ease.

Build a Team

The cross-functional team should handle the project of lease accounting standards implementation. Cooperation of all the respective departments is necessary for an organization to prepare existing leases and feed the same into the new systems. Build a team and give them roles, responsibilities, and deadlines. Think long term and hire associates who will be required to continue the task of entering, recording, and auditing of new leases as per new standards.

Data Collection 

Extracting lease data from all the know lease agreements is a daunting task. Leases now need to be in the balance sheet. Additionally, you have to extract important lease terms, history, and the current version of the lease depending on the approach selected. Thereafter, the study of accounts payable ledgers, asset registers, vendors, information from subsidiaries, even leases of small items will have to be considered.

Communication 

Bring all the investors, stakeholders real estate, IT people outside of the organization as well as your internal team on the same page. Clearly communicate how the changes in the new lease accounting standards, implementation cost, and new practices will impact the business.

Use Technology 

Excel for balance sheet entries, disclosures, calculations, compliance with new lease accounting standards is not possible anymore. There are simple and powerful lease accounting software that can help in complying with IFRS 16 standards and calculation. At the same time, Corom Transaction Management, the lease management software combined with lease accounting software helps in easy management of lease details. 

Those companies with global lease portfolios must utilize the lease management software from Yardi. You can easily view financial information alongside lease administration workflows. Creating disclosure reports automatically and within seconds across asset type or portfolio and supporting multi-currency and global metrics makes it truly enterprise-grade.

Long Term 

Adding new leases should be easy in the long run. A single repository for all lease data is essential which can be achieved with lease management software. It helps to maximize operational productivity, improves analysis capability with all the detailed information, and helps in decision making.

Prepare for implementing new lease accounting standards IFRS 16 today if you haven’t yet. Follow these 7 steps and choose Yardi Corom Lease Management for a smooth and efficient implementation process. For more details, visit www.yardicorom.com.