• English
  • Italian

Blog

Blog Image

IFRS16 and SAP

  • On 19 September 2017

On January 13, 2016, the IASB published IFRS 16 Leases, the new accounting standard applicable to all financial leases and operating leases replacing IAS 17 and its interpretations (IFRIC 4, SIC 15 and SIC 27)

The new leasing accounting standard is applicable from 1 January 2019 and subject to the endorsement phase by EFRAG and the European Parliament.

The IASB has also provided for the possibility of applying the new principle in advance, but later or at the same time as the first application of the new IFRS 15 standard Revenue recognition, which is mandatory since January 1, 2018. Therefore, an entity that wishes to apply IFRS 16 prior to 1 January 2018 must at the same time anticipate the application of IFRS 15.

The main novelty introduced by the new accounting standard with respect to the previous discipline provided by IAS 17, still in force, is represented by the uniformity of lessee, of the accounting treatment of leasing both operational and financial. In other words, IFRS 16 provides for a single accounting model for all leases.

In fact, while under IAS 17 in the lessee’s financial statements only the assets and liabilities related to financial leasing (ie leases transferring the risks and benefits related to the underlying asset) are recognized, IFRS 16 requires the lessee statement of assets and liabilities in the balance sheet for operating leases. In particular, assets represent the right to control the use of the asset, while liabilities are representative of the obligations for future lease payments. Financial leasing contracts that are less than or equal to 12 months and those for objectively valued goods (“practical expedients” granted by the new standard) are excluded from the application of the financial method.

These changes also have an impact on information systems. As far as SAP is concerned, management of IFRS16 is primarily driven by the Real Estate Management solution, with a number of additional features compared to the classic ones and the Lease Administration by Nakisa solution. With Real Estate, the lifecycle of the leasing contract is handled, from offering to closing, managing conditions and services, and managing the documentation. Lastly, postings are made in general accounts, with the management of the payment cycle.

 

PL3 & Partners has a consolidated experience of years on these financial issues and, thanks to its expertise, is able to provide an assessment to companies that have this type of need. Just write to marketing@pl3group.com or enter your details on the “Contacts” page.

 

Paolo Ponte

Sales & Marketing Manager