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IFRS 16 – Lease Accounting Compliance

See your entire lease portfolio in real-time, run amortisation schedules, journal entries and disclosure summaries with ease.

The Challenge

SIMPLIFYING COMPLIANCE

Collating and centralising  your entire lease portfolio in order to apply the new accounting treatments to every active lease within your organisation.

The Solution

Lease Accounting Software & Services from Diversus Group

Diversus Group, together with our partner Quadrant are pleased to introduce LOIS (Lease Optimisation Information System).

LOIS is a hassle free accounting solution that delivers all the transition tools and functionality needed to extract, validate and report on all the critical lease data required for full compliance  with both IFRS 16 and FASB ASC 842. By loading your lease information onto LOIS, you’re easily able to evaluate your entire portfolio and identify what leases are impacted by the new standards.

The solution is capable of functioning as a stand-alone system, or integrated into a number of ERP’s.

LOIS is online so it is easy to track, organise and maintain accounting compliance for all of your leases from one unified platform to make confronting even the most complex portfolios effortless simple:

  • Deploy as many ledgers as required, as well as the expanded set of qualitative and quantitative disclosures required under IFRS 16 and ASC 842.
  • Lease classification and calculation of subledger journal entries at the asset level to allow clients to eliminate many of the manual aspects of the record-to-report process, improving speed of close and reducing costs.
  • Simple processing: a library of API’s and Excel connections enable companies to integrate their lease accounting software with real estate administration, asset management and general ledger applications.

 

Complimentary Access for Diversus Group Clients

If you have entered into a periodic payment arrangement with Diversus Group, you may be eligible for access to LOIS at no cost.

Overview of IFRS 16

WHAT’S HAPPENING?

  • All leases will be included on balance sheet, excluding short term leases & small ticket assets.
  • This new standard will replace IAS 17; lessor accounting remains mainly unchanged.
  • Early adoption is available but only alongside IFRS 15 ‘Revenue from Contracts with Customers’.

 

What Will Be Affected?

  • The new standard will impact a company’s asset turnover, interest cover, EBIT (A/AR), perating profit, net income, cash flows & financial ratio’s, among others.
  • Short term leases and small ticket assets will be exempt from balance sheet reporting.

 

Who Will Be Affected?

  • All companies that lease assets; the IASB estimate that 1 in 2 listed companies will be affected.

Main Changes

  • The new standard will be effective from 1st January 2019. Some lessees will need to produce comparative balance sheet and P&L reports for financial years before this date.
  • IASB has provided transition reliefs to reduce financial burdens.
  • Leases will no longer be categorised based on risk and reward, but rather on who controls the Right Of Use (ROU) asset.
  • Definition of a lease may result in agreements formerly known as leases to be defined as services; and vica versa.
  • Changes to cash flow presentation, measurements of lease liabilities and recognition of lease expenses.
  • New guidance for lease variants including sale and lease back and subleases. Retrospective reporting will require lessees to review all leases, although transition reliefs are available.
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