New Accounting Standards for Leasing comes into effect on 1 January 2019.
In 2016 the Financial Accounting Standards Boards (FASB) and International Accounting Standards Board (ISAB) both released new accounting standards for leasing. Initially, the FASB and IASB began jointly to develop one new standard. However, due to the complexity involved each board has released their own models, which contain some major differences. The challenge for numerous companies is that they will have to comply with both standards and not just one or the other. For many companies, the implementation of the new models will have a significant impact on the entire organisation, not least with respect to the company balance sheet.
In short IFRS16 and US-GAAP
The International Financial Reporting Standards 16 (IFRS16) standard specifies a complete model to identify lease contracts and the management of financial reports for all the parties involved with a lease. It is a legal requirement to apply this model for all reporting periods on or after 1st January 2019. IFRS16 supersedes the current IAS 17, IFRIC 4, SIC-15, and SIC-27 processes. The fundamental differences with the earlier models are mostly for the lessees who now need to report about all leases above $5000 and those with a term of 12 months and longer. The US GAAP standard has a similar accounting method on leases to the IFRS16. The main differences can be found in:
- what leases of assets are and/or may be included,
- the threshold of the value of a lease,
- the exemption of short-term leases
- the lease classifications criteria, and
- the reporting of sales transactions.
MACS | IBM TRIRIGA
IBM TRIRIGA Real Estate Manager 10.5.1 was released in 2016 and has the IFRS 16 and GAAP processes embedded in it thereby allowing companies using TRIRIGA to comply with both IFRS16 and US GAAP, standards. The latest release of TRIRIGA Real Estate Manager 10.5.2 enhances working with these standards introducing functionality with respect to payment terms.
As an IBM TRIRIGA Business Partner MACS can support you in assessing your current compliance status about the new standards. We can also advise on upgrade your current TRIRIGA system to the accommodate the new standards. Should you wish to replace your current Integrated Workplace Management System (IWMS) and implement TRIRIGA, MACS would be happy to assist you in this journey. MACS provide full implementation, support, training and project management services to plan and deploy the latest IBM TRIRIGA software
For more information about IBM TRIRGIA and IFRS16 register for our blog updates and our specific IFRS16 briefing paper to be published shortly.