For reporting periods beginning on 1 January 2019, the new International Financial Reporting Standard No. 16, published by the International Accounting Standards Board, came into force. It requires the lessee to include almost all lease contracts in the balance sheet. This is to reflect the lessee's right to use the asset over a given period and to recognize the obligation to pay leasing instalments to it.
The legal scope of the new provisions
The provisions of MSSF16 require the lessee (or those using the asset based on contracts other than leasing) to show assets and liabilities under the lease on the balance sheet. This change is intended to increase the comparability of financial ratios between companies. However, it also significantly affects the perception of the company's results by lenders, lessors, contractors, as well as shareholders and shareholders. Due to the factors mentioned above, the issue of the correct qualification of individual contracts under the new requirements of MSSF16, their registration in the Register of Fixed Assets as well as the proper calculation of the value of assets, liabilities, interest and depreciation is becoming critical.
Functionalities of the solution
Our solution maximally enables the smooth implementation of the application of MSSF16. It refers to the best practices used by SAP, is fully integrated with the Client's SAP system and performs the most important functions under the new standard:
- maintaining a register of contracts together with a detailed analysis of their being subject to MSSF16
- detection of contracts (rental, tenancy, leasing) subject to MSSF16
- calculation of all parameters related to the asset (asset value, liability value, interest, depreciation)
- automatic creation of Fixed Asset or allocation of existing to created long-term contracts
- validation of entered contract data
- control, validation and support of the financial and accounting management process of accounting for leasing, PWUG and other long-term contracts subject to the obligation of MSSF16
- automation of periodic booking
- integration of contracts and instalments with the invoice
- register software support for contract data migration, without having to enter them manually reporting system
- reminding of important dates, such as termination or extension of the contract
- integration with standard SAP system processes in the areas of fixed assets management, contractor records, liability management, property management (SAP RE)
Client benefits
Despite the complex issue of MSSF16, our solution is characterized by the speed of implementation and ergonomics of use by end-users. After implementation, the client gains:
- reducing the costs of the accounting department
- increasing data security
- reducing the risk of errors and mistakes
- full register reflecting the reasons and manner of accounting for selected long-term contracts in the company's assets, which is an indispensable tool for supporting Chief Accountants during the audit of financial statements by statutory auditors.
