CFO Brief - Gearing up for change: New lease accounting proposals
Welcome to our CFO Brief Gearing up for change: New Lease Accounting Proposals. This publication is tailored especially for CFOs and finance executives and provides an easy to read look at the financial and commercial issues arising from the changes to the accounting for leases from the perspective of the lessee.
Issue: The proposed changes to accounting for leases require all leases to be recognised ‘on balance sheet’.
Impact: The proposals are expected to have a significant impact across various facets of company activities, including finance, treasury, IT, internal audit, M&A, legal, human resources and tax. CFOs and finance executives have an important role in ensuring the effective implementation of these proposals.
Perspective: We expect that compliance will be time consuming and costly and, for some companies with a large number of complex leases, the cost of implementation is likely to be even greater than that associated with the transition to Australian equivalents to IFRS. It is therefore essential that companies develop and execute a well thought out plan to ensure a smooth transition. Through effective planning, potential problems and issues can be identified and addressed in a cost-effective way which results in ‘no surprises’.
Call to Action: Analysts and investors have already started to question how companies will be affected by these proposals. Be prepared for any questions that may arise at the next results announcement or AGM. Appendix A sets outs actions for CFOs to consider to address the major financial and commercial changes the new proposals are likely to have on companies.
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