INNERVISION Lease Accounting LOIS – ASC 842/IFRS16

Even before the announcement of the new IFRS 16 and ASC 842 standards, Protominds was working to educate companies on the coming changes and how to leverage the existing Revenue Recognition work to help with compliance. Our industry leading experience and focus on Office of the CFO solutions, enables our customers to ramp up quickly and evaluate the options to not only comply with the standards, but also transform finance during the process.

The main differences between Topic 842 and IFRS 16 are in relation to certain aspects of the lessee accounting model. In contrast to the lessee accounting model in Topic 842, which distinguishes between finance leases and operating leases in the financial statements, the lessee accounting model in IFRS 16 requires all leases to be accounted for consistent with the Topic 842 approach for finance leases. Consequently, leases classified as operating leases under Topic 842 will be accounted for differently under GAAP than under IFRS and will have a different effect on the statement of comprehensive income and the statement of cash flows under IFRS 16 than under previous IFRS standards. Whether you are just beginning your introduction into the topic of Leasing or are well underway with your project to implement the new standards, Protominds has the experience, resources, and industry knowledge to help you take advantage of this opportunity to transform your business.

Just as the new Revenue Recognition standard (IFRS 15 and ASC 606) was a joint project between the FASB and IASB, the Leasing project began in a similar manner with many of the requirements in Topic 842 the same as the requirements in IFRS 16. However, unlike the converged standard for Revenue Recognition (IFRS 15 and ASC 606), the new leasing standard is not converged. This means there are differences in how the two accounting standards handle certain accounting transactions.

For operational leases, they are currently reported off balance sheet and disclosed in the notes of financial statements. However, in the coming years, organizations will be required to capitalize many of these operating leases and record them in their balance sheets as assets and obligations.
While this is a significant change in how businesses are meant to manage their leases, early adoption and planning can provide many benefits including greater visibility on lease exposure and reduction in spending.
Ultimately, to prepare for the new standards, organizations need better, tighter integration. They need a framework that provides an efficient mechanism to collect the data needed to meet the new accounting standards.

Protominds works with you to evaluate the system changes needed under the new regulations, determine how significant they will be going forward, and lay out a path toward implementation with an emphasis on the impact to the Innervision LOIS system. We provide a holistic view to the impact the new Leasing standard will have on your organization. Our methodology and approach will help ensure that you can meet the upcoming changes to the standards and eventually your digital transformation goals – Are you Leasing Ready!!!

Innervision’s lease accounting software, LOIS, is the most cost-effective way for companies to manage their lease portfolios and transition to the new accounting standards. The solution is a hassle-free lease accounting software that delivers all the transition tools and functionality needed to extract, validate and report on all the critical lease data required for full compliance with both IFRS 16 and ASC 842. By loading your lease information onto LOIS, you’re easily able to evaluate your entire portfolio and identify what leases are impacted by the new standards.

Companies that use LOIS to manage and enhance their lease portfolio are able to produce all the accounting information required to accurately complete the financial statements obligatory for compliance; including income statement, cash flow and balance sheet. LOIS will also generate the complex calculations for you with ease.

 

Companies have thousands of leases and they will have to go through them lease by lease.

Veronica Poole

Deloitte UK’s national head of accounting

We’ve met with world leading accounting firms to ensure that our solution is the best available and ensures full compliance with the new standards. With LOIS, businesses are able to run the required comparative P&L and balance sheet reports for the years prior to implementation as well as providing all the data and information needed for efficient long-term lease portfolio management. Innervision’s lease accounting software is a built for purpose application that allows you to run reports for both internal lease management and external compliance obligations, covering current and new lease accounting rules for businesses under IASB or FASB jurisdiction.

With the need to produce comparative retroactive reports for financial years before the effective date and the time required to collate and identify all your active leases and obligations, the deadline to get ahead is fast approaching and “The Big 4” accounting firms are advising that lessees need to begin making preparations immediately. Innervision provides a solution that is both cost-effective and efficient.

The potential impact on business is huge and is likely to affect important key performance indicators significantly.

Veronica Poole

Deloitte UK’s national head of accounting

Lease Accounting Software (LOIS) – The Key Features

Dashboard – A Top-Level Overview of Your Portfolio, at a Glance. The LOIS user dashboard provides you with a consolidated overview of all the active leases within your organization. Use this information to:

  • Present the initial scope of the project
  • See how active leases are distribution globally
  • Recognize leases that require immediate attention
  • View and analyze data dependent on the selected search criteria set by the user

Adding a Lease Couldn’t Be Simpler. Upload your lease data with ease. Ensure all your critical lease information is centralized in one place.

  • Add leases to the system using New Lease API, integrated upload tool or manual input
  • Regular and Irregular profiles (multiple rentals with different periodicities)
  • Reporting using IRR or IBR
  • Multi-asset addition
  • Document storage
  • Ability to save mid input as Draft Lease or confirm to Activate a lease
  • Edit Add Lease inputs pre-activation

Intuitive In-Life Changes. All in-life lease amendments are catered for, adhering to the IFRS 16 and FASB ASC 842 standards covering:

  • Full extensions
  • Part terminations
  • Full early terminations
  • Consideration changes
  • Indexation price changes (IFRS)
  • Rental corrections and impairments

Simple to Use Accounting Reports. Run multiple lease accounting reports for numerous accounting standards (IAS 17, IFRS 16 and FASB ASC 842). Instantly see how your critical performance metrics change under each standard.

  • IFRS 16 accounting report showing asset, liability, future rentals and disclosure summaries
  • IFRS 16 journals
  • IAS17 vs IFRS16 showing the difference in reporting outputs based on the reporting rates of the leases held in the system
  • FASB ASC 842 accounting report showing asset, liability, future rentals and disclosure summaries
  • FASB ASC 842 journals

Lease Accounting SummaryThe summary report provides users with a detailed overview of the changes to financial statements and extracts the right of use (R-O-U) asset and liability movements under IFRS 16 with the associated income statement and cash flow movements. The lease rentals are spread across the required time buckets to enable the lease disclosure notes to be completed. The FASB version of the accounting summary contains the same information as the IFRS 16 report above but splits the outputs into Finance and Operating leases.

Running Amortisation and Depreciation schedules couldn’t be simpler – At the commencement of a lease, LOIS generates an asset and amortisation schedule based on the financial information input into the system. With each modification to the lease, a new amortisation and asset schedule is created and stored to allow retrospective reporting based on the schedules in play at that time. These schedules drive the accounting outputs.

Journal Entries made easy – Journals are created in the system for both IFRS 16 and FASB ASC 842 accounting entries. LOIS has it’s own generic general ledger codes associated with each event in a lease’s life. These codes can be mapped to the user’s general ledger codes. Journals can be exported to Excel for upload to the general ledger or avail of the GL API to remit the journals to the user’s general ledger in an automated fashion.

Access a Full Suite of Standard Reports

LOIS’s full suite of standard reports provides you with all the tools required to help ensure a successful transition to either IFRS 16 or FASB ASC 842. Track your progress from beginning to end.

  • Forecasting reports i.e. future portfolio run off reports:
    • Rentals obligations report
    • Capital outstanding report
    • Interest outstanding report
    • Outstanding liabilities not capitalized
  • Movements between defined date parameters:
    • Capital paid
    • Interest paid
  • Supplementary accounting disclosure reports:
    • R-O-U asset by asset category
    • Disclosures by asset category

LOIS – One place for it all

LOIS stores comprehensive data about all your organization’s leases – so you can always lay your hands on the information you need.

Save time

With LOIS as the hub of leasing in your organization, processes are automated and data is instantly available, making lease-related tasks faster.

Make informed decisions

Generate reports, review costs, check terms and instantly access other information to help you make excellent decisions.

Save money

LOIS analyses the total cost of ownership and notifies you of upcoming key dates, allowing you to identify opportunities to reduce leasing costs.

Customized and flexible

We make sure LOIS integrates with your existing processes and systems. Everything we do is tailored to the needs of our individual clients.

Prepare for IFRS 16 Leases / FASB ASC 842

Changes to global lease accounting rules will require companies to account for the majority of the leases on balance sheet. LOIS incorporates unique lease accounting functionality, enabling you to stay compliant with current and future lease accounting regulations.

How LOIS works

LOIS stands for Lease Optimisation and Information Software. It provides a safe place to store information relating to all the leases in your business.

Manage

Save lease details, documents, conditions, costs, key dates and more in one place. We’ll help you collate, input and maintain this data.

i

Report

Understand your overall position or drill down into specific leases with regularly scheduled and customizable reports.

w

Communicate

Put new lease opportunities out to tender, select preferred suppliers and communicate with lease providers at renewal times.

Secure

Strong encryption protects your data and LOIS is updated in line with best practice. Everything is backed up regularly as you work.

Global

Use LOIS from anywhere, as long as you have an Internet connection. You have instant access to your central lease hub, 24/7.

Real-time

LOIS always shows the very latest data, including projections, renewal offers and more – so you can make informed decisions.