20 January 2016
After several years and multiple exposure drafts, the International Accounting Standards Board (IASB) on January 13, 2016 issued a new accounting standard for leases, IFRS 16. Find out more...
The new accounting requirements aim to provide a more precise representation of lease assets and liabilities, replacing IAS 17 which was introduced over 30 years ago.
The IASB estimates that public companies using either the IFRS Standards or US GAAP have around $3.3 trillion (USD) of lease commitments, and over 85% of those commitments do not appear on their balance sheets. A prime example often used where this has significant impact is in the airline industry, where a fleet of leased airplanes may not be reflected on the balance sheet of said airline. IFRS 16 addresses this issue by requiring all leases to be reported on a company’s balance sheet as assets and liabilities. The majority of the changes in the new standard apply to lessee leases, while lessor leases, for the most part, remain similar to the previous standard.
Within the PeopleSoft Asset Lifecycle Management (ALM) suite, the two affected products are PeopleSoft Asset Management and PeopleSoft Real Estate Management. Our Strategy and Development teams have been working for years on significant enhancements to address the new accounting requirements, and we’ve invested heavily in new product capabilities and functionality that will be critical to any organization adopting the new standard when it goes into effect.
The IFRS 16 Leases standard is effective on January 1, 2019. Early adoption is allowed for organizations that will be also adopting the new IFRS 15 Revenue Recognition standard, so they can convert at the same time.
The US Federal Accounting Standards Board (FASB) has not yet updated their site or made an announcement on when they will release their standard (still expected early 2016). The two boards have differed in a few areas, so it will be interesting to see what their final standard will contain in the way of variations.
For more information, including links to additional information and documentation, please refer to the IASB's press release for the new accounting standard.
Source: PeopleSoft Apps Strategy
Send this page to your friend