13 Things To Consider When Searching For IFRS 16 Software

Companies that have to apply IFRS 16, have had their hands full with the technical application for their leases. It created a big gap in the industry, and it is quickly filling up with a diverse array of lease accounting solutions.

How would you choose the leasing tool you need?

We have seen several solutions aimed at different aspects of managing leases and IFRS 16. In researching a solution, companies often get overwhelmed trying to decide which tool to use.

To help you out, we’ll walk you through a few things to consider. Before we go to the detail, please remember the following:

Your requirements today might be different compared to the future,
because your lease portfolio changes. You need an elegant tool that
provides IFRS 16 support, with minimal intervention from you side.

Below we discus some important functionalities that a lease solution should have. It can act as a “go-to tick-box” for you.

1. Flexible lease terms

The tool should be able to handle any payment structure to calculate your liability balance. 

This includes catering for all types of new leases, changes in the lease terms and ad-hoc lease accounting transactions

2. Bulk Import functionality

All actions, whether loading new leases or lease modifications (changes), should be available in bulk. This can be either with easy Excel uploads or via an automated process.

3. Customizable and feature rich reporting

Automated Reporting is one of the key benefits of a lease tool and you should be able to create and edit reports to suite your needs.

It should be both presentable and exportable within the format that mimics your Financial Statements notes and disclosures. You shouldn’t have to spend any time manipulating the data in

4. Managed migration

Moving onto your new lease accounting system should be a quick and easy process. A fully managed migration should be available, where you simply provide your current lease data, and the migration team will handle the rest.

Included in this process, should be a reconciliation to the opening balances of your lease portfolio. This gives comfort over the reliability of the tool, not to mention, it will mitigate additional procedures during the audit.

5. Secure

The security of any cloud-based system is of the utmost importance especially when financial information is involved.  Make sure your IT department checks that all security best practices have been followed.

6. Fine-grained user control

Most of the time you would have multiple employees that would need to use the tool. It will thus be crucial to ensure that the appropriate permission levels are available, based on the employee’s role within your firm.

This can include a user being able to manage settings, or only being privy to see a specific business unit. You may also like to give the auditor read-only access.

7. Detailed audit trails

Generally, there will be more than one user that needs to use the tool. Your lease tool should have readily available audit trails available to see which leases changed, by whom, and what were these changes.

8. Document storage

You should have the option to load and manage lease contract documents and amendments to them, as you require. This is quite handy if you would like to review the lease terms that have been loaded. Auditors especially like this feature when paired with read only access.

9. Trusted Support

You should have access to an IFRS 16 expert that will act as your trusted IFRS 16 advisor. They should help you with guidance, how to manage the tool and maybe even assist with IFRS 16 training.

10. Access to the raw data

Your lease data should never be “locked-in” your lease tool. You should be able to export all your data effortlessly in a structured format should the need ever arise.

11. Catering for errors 

Controls should exist to ensure that prior periods are “Closed-off” to mitigate any changes to financial information already reported on.

However, what if you forgot to include a lease but you already posted your journals in a “Closed-off” month? Your system should be able to calculate the catch-up journals seamlessly without impacting prior periods.

12. Special Lease Accounting Transactions

IFRS 16 doesn’t operate in a silo. It affects and is affected by a few other standards. The most common occurrences are:

Your lease accounting tool should be able to automatically account for these three standards.

13. Pricing

Last, but not least, the price should match the value it provides. Most companies will charge a monthly/annual license fee. Be wary of large up-front fees, since providers can go out of business which might lead to the discontinuation of the tool, support, or both.

Summary

As you can see, there is quite a few considerations to make before you can decide on a lease tool. Start by considering what your goals are for your lease solution and work through each tool’s benefits and features.

The Rubli Lease Tool ticks all the boxes and our clients attest to a well-rounded lease accounting solution.

Get in touch if you would like to discuss how we can assist you.

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