- IFRS 16 is effective from 1 January 2019
- Many entities are underprepared for the change
- Members need to understand the common application issues
The new leases standard, IFRS 16 Leases, fundamentally changes the way in which entities account for leases. In addition to the headline change of ‘bringing most leases on balance sheet’, the standard results in significant changes to financial reporting and has many broader business implications. The transition requirements in IFRS 16 are relatively complex with entities needing to make a number of transition-related decisions and judgements which can have significant financial consequences.
IFRS 16 became effective on 1 January 2019. It applies mandatorily to 31 December 2019 full year and half-year financial statements (and already applied to 30 June 2019 half-year financial statements). While we are seeing an increased level of interest and effort by entities to understand the impact of IFRS 16, many are still significantly underprepared for the implementation of this major change.
In this article, Siva Sivanantham, CA, Director - National Financial Reporting Advisory at Grant Thornton, discusses the common application issues entities are encountering in implementing IFRS 16.