Implementing IFRS 16 – Treasury consideration

17 May 2018

At our client event on the impact of IFRS 16 on the Treasury community held in late March 2018 we asked our audience of treasury professionals to describe their current implementation status.  Encouragingly 88% of attendees had made a start to IFRS 16 implementation – although to varying degrees of completion – ranging from reading the standard, setting up a project team, performing formal impact assessments and even commencing with implementation.

Our experience suggests corporates should be aware that implementation can be cumbersome and costly. Some key points to consider on your implementation journey may include:

  • Setting up your project team – plan what needs to be done, identify dedicated personnel and set accountabilities.
  • Collect all the relevant data – ensure that you have completeness in the scope of contracts you will be assessing. Volumes of contracts can be large. We’ve also seen amongst our clients that contracts are often paper based and spread across different departments as well as geographical locations.
  • Identify and understand the impacts - contracts are not always light reading. It can be hard to identify what information may result in certain accounting implications.
  • Future proof your IT, processes and controls – as more assets will be brought on balance sheet, processes will become more complex and administratively burdensome. Using spreadsheets may no longer suffice and instead specialist IT systems should be considered. Using one digital platform as your source of truth for calculations, postings and presentations can significantly simplify processes and increase controls going forward. From a technology perspective, we recommend starting your systems vendor selection process early.

So what does the ideal IFRS 16 implementation look like?

Finally, once you have considered all of the above, this is what we believe good looks like:

Treasury blog image

For those that are interested in understanding more around the technical impacts of this new accounting standard, please visit our IFRS 16 website.

 

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