Following the introduction of IFRS16, decisions made by lease managers will now impact companies’ balance sheets. This places a significant focus on the need for strong lease governance within organisations.
Key judgments must be recorded against each contract, not just in assessing whether a lease exists, but in identifying the reasonably certain liability term and managing the cost and review structure over the life of each lease agreement.
Changes in these judgments must be documented and reasoning recorded in a system so that when audited, all variations to figures reported under the standard can be justified.
Without a system to manage audit requirements, the review will impose risks as well as a significant workload on both lease managers and their finance team. A simple Lease Accounting system that sits solely within finance is not enough as audit trails around key judgements must be traceable from the lease manager through to the finance team.
Portfolio Manager—our lease, contract and asset management system—has capabilities for managing international real estate portfolios, including all types of leases. The IFRS16 framework provided by Portfolio Manager ensures an auditable record is kept of all key decisions made over the life of the lease that impacts valuations of the ROU asset or the calculation of implied liabilities. Disclosure is supported by an audit trail each and every time there is a structural amendment to the contract.
Integration with various Lease Accounting packages provides our clients with a stable, secure repository for all contract information including leases that fall within the IFRS16 standard. Portfolio Manager provides a comprehensive set of functionality to allow the day-to-day management of leased assets that meet the needs of the leasing teams and audit requirements of the office of finance.