Sophisticated PROMATIS solution concept for IFRS 16 compliance
Denver, September 24, 2018 – The financial world is facing major changes: From January 1st, 2019, the new International Financial Reporting Standard 16 (IFRS 16) will enter into force, heralding a new era of leasing accounting. Massive changes and organizational challenges will be faced in particular by companies that, being lessees, have to date made extensive use of operating leasing. But what does IFRS 16 mean precisely, and why is it now time to meet the necessary preparations? PROMATIS – specialist for intelligent business processes, Oracle applications and technologies from one source – will be hosting a webinar on this topic and explain how leasing relationships are identified and balanced according to the IFRS 16, and which special features need to be taken into consideration concerning approach, valuation and reporting. A mature solution concept optimally rounds off the PROMATIS service spectrum.
IFRS 16, published by the International Accounting Standards Board (IASB), is going to replace the current International Accounting Standard 17 (IAS 17). To date, IAS 17 has determined that only finance leases are included in lessees’ balance sheets. This is similar to an externally financed purchase resulting in an asset and a liability. At the same time, IAS 17 also regulates the classification of contracts as finance leases. Accordingly, any lease that is not a finance lease is classified as an operating lease. Here, the obligations from leasing agreements are only recorded off-balance sheet in the attachments – with little effort.
The new IFRS 16 removes this distinction, leaving the requirement that almost all leasing liabilities need to be reported in the balance sheet. The new standard needs to be applied to all financial years beginning on or after January 1st, 2019. At the latest at the first-time application point, the previous disclosures in the attachments need be converted into obligations: the new leasing standard puts an end to off-balance sheet items and leads to more transparency in balance sheets.
With the effectiveness of the new standard, many companies are up for a mammoth task. Because a number of important measures are needed in order for processes, guidelines, and IT systems to become IFRS16-compliant. This means that first and foremost, all leasing contracts need to be reviewed and reassessed – especially those currently treated as operating leases. This means that previously undocumented data needs to be recorded for accounting purposes, and processes for continuous data management need to be defined. Furthermore, the IT systems need to be adapted to the new regulations supporting accounting and other processes such as procurement, administration, and tax treatment of leasing relationships.
PROMATIS offers a complete spectrum of services in the form of analysis, consulting and workshops. In addition, functional extensions of the Oracle applications are available as a solution concept tailored to requirements. The PROMATIS webinar does not only revolve all around the considerable effects on the systems and processes for contract administration and the generation of booking-relevant data, but the experts of PROMATIS are also bringing along a well-founded solution strategy.
For companies that are still beginning their IFRS 16 implementation, this webinar is the perfect choice. It enables an early planning and IFRS 16-compliant implementation. With the help of a precise and systematic approach, the challenge becomes an opportunity for all participants to optimize their processes as well as to design their IT landscapes, making them rule-compliant, lean and streamlined. This is the only way for companies to secure a unique advantage over their competitors.
Interested parties can register for the webinar for free and gain more information about the holistic solution concept of PROMATIS. The Webinar will be held in German.
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