Your company will have to comply with the new IFRS16 standard? You are in the process of evaluating different tool options? Then our upcoming live demo will be very interesting for you.

IFRS16 – What’s the change?

In early 2016 the International Accounting Standards Board (IASB) issued ‘IFRS 16 Leases’. It sets out principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor.

When IFRS16 becomes effective on 1st January 2019, a lessee will need to …

  • capitalize the right to use the underlying asset (‘Right of Use ROU’)
  • recognize the financial liability representing the obligation for future lease payments
  • separate the depreciation part of the lease assets from interest on lease liabilities in the income statement

… for all contracts that are to be considered leasing contracts.

IFRS16 – Why many tools are no perfect fit

It is not exaggerated to state that most existing ERP-systems are not prepared to support the administration of leasing contracts very well. The problem is not to book assets, liabilities, interest and depreciation, but to administrate the contract details throughout their lifecycle. A suitable system should support the full spectrum of lease management in one central solution.

Currently a number of tools are coming up that can calculate the numbers and accounts that need to be booked for leasing contracts. These tools, mainly originating from an EPM background, are not ideally suited to support complex organizations in their lease administration, as they only fulfill parts of the requirements. They are typically able to administrate leasing contracts and to do the necessary calculations (NPV, IRR etc.), but they are not integrated with the ERP-systems that hold relevant master data and that need to receive final bookings.

An ideal solution, however, should neither be an isolated lease administration tool nor a pure booking extension to a finance tool. Instead, it should work like a distinct “subledger” for leasing contracts, which combines special lease administration functionality with a direct ERP-integration. As companies can have several ERP-systems from different vendors in their architecture, the central lease administration tool needs to be able to connect different organizational units to different systems. A separate tool is therefore preferable compared to a solution within one of the existing ERP systems.

SAP Lease Administration by Nakisa:
Online Demo on 23rd May, 11 am CET.

Our upcoming online demo will introduce you to a web-based tool that integrates into SAP ERP and offers all functionalities needed to comply with IFRS16. Within one hour we will give you a first introduction into SAP Lease Administration by Nakisa. We will cover …

  • how SAP’s Lease Administration extension handles the new lease accounting standards,
  • an introduction into the web-frontend of the central SAP lease contract repository,
  • the advantages of a direct ERP-integration, and how that looks in practice,
  • what workflows and analytical features will assist your central lease administration.

The online-session will take place on 23rd May at 11 am CET.

Also read our Point-of-View-Paper on IFRS16.

You are interested in more project-related PoV-Papers? You might want to read about our consolidation solutions with BPC Embedded, our project at Orell Füssli or our BPC solution for a chemicals company.

If you are interested in corporate planning, please check out our study Benchmark 2017.

By Andreas Krüger