In June 2025, the International Accounting Standards Board (IASB) launched the Post-Implementation Review (PIR) of IFRS 16 Leases to assess whether the standard is operating as intended and to gather stakeholder feedback on its practical application. The PIR aims to evaluate whether IFRS 16 has achieved its objectives – particularly to enhance transparency, comparability, and faithful representation of lease obligations – while also identifying areas where implementation challenges, unexpected costs, or inconsistencies have emerged.

Through targeted roundtables, technical forums, surveys, direct outreach, live polling, and collaboration with local standard setters, Chartered Accountants Australia and New Zealand (CA ANZ) gathered insights from thousands of stakeholders across Australia and New Zealand, including preparers, auditors, directors and users of financial statements.

The sentiment is clear: while IFRS 16 has delivered improvements in transparency and quality, its complexity, cost, and reliance on judgement continue to challenge its effectiveness in practice.

The following key themes were raised in our outreach:

• Complexity and judgement are the most significant practical challenges, particularly in areas like lease term, discount rates, and remeasurement.
• Comparability is undermined by diversity in application and presentation.
• Costs of implementation and ongoing compliance are higher than expected.
• Disclosures are more structured than under the preceding IAS 17, but their usefulness varies depending on how clearly and consistently it is presented.
• Cash flow presentation remains a sticking point, with users calling for more intuitive classification and alignment with operational realities.
• Misalignment with other standards, notably IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, complicates application and can result in inconsistent outcomes.
• Audit effort is significant, with auditors reporting that a high proportion of time spent on IFRS 16-related matters.

There was broad support for targeted improvements to clarify and simplify the standard, rather than overhaul it. Key recommendations include:

• Clarify judgement-heavy areas through targeted guidance and illustrative examples.
• Improve disclosure requirements to support transparency and comparability. Reduce compliance burden by expanding practical expedients and simplifying reassessment triggers.
• Refine transition guidance in future standard-setting projects, including longer lead times and clearer implementation support.
• Further explore complex concepts that overlap with other standards, including lease-related cash flows, rent concessions, and sale and leaseback transactions.