Becoming compliant is challenging but staying compliant next year can just as difficult. How do you streamline IFRS 16 reporting? We have collected seven tips and tricks to stay compliant indefinitely.
This year you managed to compile all IFRS 16 contracts. Then you made sure that all contracts were independently and correctly treated. What about next year? How do you make sure you stay compliant year after year?
1. Define responsibilities
Most likely, there is a different person in your organization responsible for each leasing contract – close to where the underlying objects are utilized in your business. We believe this person should be responsible for updating and otherwise maintaining the contract. Most times, the alternative is for the finance department to make best guesses.
2. Lock up the reporting period
No CFO enjoys when historical data is changed. You need to find ways to make sure what was compliant last year stays that way.
3. Stay ahead of expiry dates
All leasing contracts should be important to the company, and some are simply strategic. For a retail chain, for example, it is crucial to be in control of shop rent. Also, this is important to the finance department.
4. Look into the future
Once you are IFRS 16 compliant you should be able to look ahead and see what obligations your business has in the future.
5. Timing (is everything)
Sometimes it can be smart for your company to choose the timing of revising your leasing contracts. Be sure you are noticed in advance.
6. Fight all dependencies on key personnel
Did your colleague or your auditor build the IFRS 16 model in Excel? If yes, you may already have made yourself dependent on a small number of people.
7. Make it to become more than compliance
Professional contract management is valuable to any organization: It is the basis for cutting costs, saving time, improve financial management, and more.
