The Cost Benefit Analysis of IFRS 16; do the benefits outweigh the costs?

The answer is Yes they do! The IASB has concluded that the benefits of the IFRS 16 outweigh the costs. Refer to this article.

http://www.ifrs.org/-/media/project/leases/ifrs/published-documents/ifrs16-effects-analysis.pdf

Effects Analysis International Financial Reporting Standard® Effects Analysis | IFRS 16 Leases | January 2016 | 5 10 See Section 7.1—Effects on the cost of borrowing. 11 See Section 7.2—Effects on debt covenants. 12 See Section 9—Effects analysis for lessor accounting. 13 See Section 7.4—Effects on the leasing market and access to finance for smaller companies. 14 See Section 4.1—Improved quality of financial reporting. www.ifrs.org

Are you running SAP? If so then implement the Real Estate Management (RE-FX) and take advantage of the simplicity and maturity of this module. RE-FX was initially built to handle operating leases which already had many of the leasing functions such as rent adjustments, renewals and terminations. The data required to apply IFRS 16 is similar to that needed to apply IAS 17. The solution was enhanced to apply the IFRS 16 standard. Take advantage and harness the potential that SAP Real Estate Management offers and realise the benefits:

Avoid cumbersome spreadsheets that are time consuming to manage, limit good process, inaccurate and an audit risk for non-compliance.

Provide transparency and centralise your lease portfolio

Seamlessly integration into your existing SAP finance system

Reduce payroll costs by improved control and process

Streamlined and improve decision making

Harness the power of your data

Red Lounge Consulting can deliver your project remotely while coming on site for key project deliverables. We have developed all the necessary tools ready to deliver your SAP IFRS 16 requirements. Contact us today for a chat.

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