A LeaseAccelerator survey of over 100 senior finance professionals across the Asia Pacific region finds one-quarter of companies are yet to adopt the standard despite deadlines having passed last year.
March 31, 2020 (Sydney): LeaseAccelerator, the pioneer in the Enterprise Lease Accounting software market, has surveyed the Asia Pacific market and discovered that 25% of companies are yet to implement IFRS 16 (AASB 16 in Australia, NZ IFRS 16 in New Zealand, SFRS 16 in Singapore and HKFRS 16 in Hong Kong).
In a survey conducted with over 100 senior finance professionals (VP or C-suite level), LeaseAccelerator looked at the implementation and initial reporting periods for companies required to comply with the new lease accounting standards. The report, APAC Lease Accounting Progress Report 2020, highlighted that the industry generally is less advanced than expected in adopting the new standards.
General Manager of APAC, David Byrne, said regional organisations are grappling with the unexpected complexity of the changes required to adhere to the new standards.
“Last year when we surveyed the market prior to the deadline, companies said they were finding the project very complex. I think the complexity has been even greater than anticipated at that time, which is why we see that a quarter have not got there yet,” he said.
IFRS 16 has produced many positive results for those companies who have implemented their solutions, with over one-third (37%) saying they had discovered broader business benefits than simple improvements to lease accounting. Mr Byrne said these typically took the form of improved financial decision making.
“IFRS 16 was imposed upon companies, but there are a lot of silver linings emerging,” he said. “Companies are finding that having this new data source around leasing allows management to make better-informed financial decisions, such as lease versus buy decisions and enhanced balance sheet analysis.”
While data collection was the biggest challenge for companies pre-deadline, the biggest problem now is keeping up to date with changes to lease portfolios.
“The problem companies face now is that compliance is not an end point – it’s really the beginning,” said Mr Byrne. “Most lease portfolios will see at least half of their leases change in some way over 12 months, and capturing those changes requires cooperation and communication from across the business, not just accounting. Globally we are seeing a big trend towards automation as companies realise that keeping this as a manual process is unsustainable.”
LeaseAccelerator’s survey was conducted in December 2019 and January 2020. It follows a 2019 report, Australian Lease Accounting Progress Report 2019. Download the 2020 report here.
LeaseAccelerator offers the market-leading SaaS solution for Enterprise Lease Accounting, enabling compliance with the previous and new lease accounting standards. Using LeaseAccelerator’s proprietary Global Lease Accounting Engine, customers can apply the new standards to all categories of leases including real estate, fleet, IT and other equipment at an asset-level. On average, LeaseAccelerator’s Lease Sourcing and Management applications generate savings of 17 percent on equipment leasing costs with smarter procurement and end-of-term management. Learn more at http://www.leaseaccelerator.com.au.
For more information and interviews with David Byrne:
Kristin Westlake, The Continuum Partners
+61 416 219 358