We noted in an earlier post that implementation of IFRS 16 would likely result in greater effort for finance teams as they had to contend with both a greater volume and complexity in the postings for operating leases.

While there are transitional options for existing leases, many businesses will make the decision to fully adopt the standard from day 1. This may be a significant effort, and indeed, some of our customers who are already starting on this journey are grappling with many thousands of contracts which must be manually collated with documentation sourced from disparate locations, calculations done to separate assets from services components, restatement of accumulated depreciation and prior year financial statements for comparability as well as calculation of the full financial liability in the leases obligations going forward.

Not only does all of the information need gathering and the relevant journals posted, but the backing documentation must be referenceable by the system for audit purposes. In some lucky instances, this can be simply linked to an existing CMS if it exists, in others this is a further practical challenge.

This is no trivial activity.

In order to help them, we have produced a templated SAP BPC IFRS 16 module which can be added to any existing SAP BPC financial consolidation software installation and which has become a standard module in the BPC Cloud solution which we deliver as an SAP BPC cloud service.

You can read more about our SAP BPC IFRS 16 for SAP solution here.

To help you plan your IFRS 16 Implementation and business impact statement we have prepared a list of useful resources: 37 Essential Free Resources for IFRS 16

You might also find our blog post The Key Differences Between IFRS 16 and IAS 17 useful background reading. Along with What is IFRS 16