Deloitte and Quadrent have partnered to perform an analysis on actual IBRs adopted by both public and private companies in their lease reporting over recent years. Our findings largely suggest that an improved IBR strategy may present the opportunity to benefit from the rapidly changing economic environment and optimise balance sheet and profitability metrics.
Our analysis has noted the following:
Many organisations have not updated their IBRs and are using IBRs determined at the date of transition to AASB 16 for leases newly incepted or modified in 2021, despite market movements
Although this could be due to the significance of new leases, IBRs should not be viewed as a compliance-only exercise
Applying the correct IBRs could have a significant positive impact on key financial ratios. An improved IBR strategy may better position organisations to benefit from the rapidly changing economic environment and optimise their balance sheet and profitability metrics.
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