IFRS 16 has much wider consequences than just within the finance function and as an accounting change; it removes the distinction between finance leases and operating leases, meaning that most leases will now need to be brought onto the balance sheet. What does this mean for your bank covenants?
Take a few moments to just think about all the leases within your business – photocopier, buildings, vehicles, telephones… the list is endless. Are you comfortable that you know them all – does anyone 100%?
Don’t underestimate what this means and the investigation it might take to understand all of the lease products your business operates with. This isn’t just an accounting problem, it’s a standard that will seep into all functions of a business – operations, services, maintenance..
How do we, as finance professionals, cascade this message to our colleagues that might not understand the significance of the changes to financial statements? How do we work with our stakeholders to set up processes business wide to capture all information required?
The skills that we need to invest in now, are how we ensure we have the technical know-how alongside the behavioural competencies to get this right. We need to ensure that the commercial implications of this standard are understood across the business, not just within finance.
The Academy of Professional Development has a dedicated suite of courses to help you along this path.
Members of the Travel, Tourism & Hospitality Community will receive a discount when using code ACADCOMM19 at checkout.
IFRS 16 Leases - managing the risks of first time adoption
IFRS 16 Leases - managing the risks of embedded leases (half day)