Lease accounting

For New Zealand’s Tier 1 and Tier 2 for-profit reporting entities, the introduction of NZ IFRS 16 Leases has changed the reporting landscape and has long-lasting ramifications for businesses.

For Tier 1 and Tier 2 public benefit entities, the External Reporting Board (XRB) has publicly stated that it is committed to issuing PBE IPSAS 43 Leases for (at least) public sector reporting entities in the future, which will be substantively similar to NZ IFRS 16.

At BDO, we have experts and a software solution that can help you, no matter how big or small your business is.

Finding lease accounting challenging?

Our experience working with clients on NZ IFRS 16 reporting has shown us that there are several recurring questions centred around critical problems.

The areas our clients find most challenging are: 

Adopting lease accounting

Adopting lease accounting can feel challenging, whether this is part of an entity’s wider project around stepping up to adopt NZ IFRS for the first time, or where an entity has acquired a business where lease contracts have been assumed (and lease accounting is applied for the first time, or is required to be reset).

Further details can be found on the adopting lease accounting web page.

Managing lease accounting on a day-to-day basis

Lease accounting can be time-consuming without the right lease accounting management tool.

While spreadsheet-based approaches can be manageable, there will come a point where the nature and scale of an entity’s lease population will require software-based solutions to be considered.

BDO’s own lease accounting software solution is available to entities by:

Learn more about lease accounting software solutions below.

Addressing on-going changes to your lease population

The lease accounting requirements for dealing with changes in lease payments and new, modified, terminated leases can be challenging to address, and if done incorrectly can result in material errors.

Further details can be found below.

How BDO can help

BDO Lead Direct SaaS user licence

BDO Lead direct SaaS user licence

If you are looking for an easy-to-use, NZ IFRS 16-compliant technology solution to manage your lease portfolio, look no further than BDO Lead. 

BDO Lead SaaS is a self-service lease management software that gives you control over your lease data and the ability to process changes and prepare reports effectively and efficiently across all your leases.

This service is ideal for organisations that:

  • Typically have more than 100 leases
  • Need to manage lease accounting daily or regularly
  • Have a dedicated in-house personnel resource for lease accounting management
  • Currently pay for the rights of access to software, IT helpdesks or NZ IFRS helpdesks

Learn more >


Outsourced lease management service

Outsourced lease management service

Our seasoned lease accounting experts take on the responsibility of addressing our clients’ lease accounting challenges.

We know and understand the intricacies of NZ IFRS 16 and leverage our advanced technology solution, BDO Lead, to execute the required calculations with precision.

This service is ideal for organisations that:

  • Typically have less than 100 leases
  • Only need to manage lease accounting annually (periodically)
  • Have a limited ability to keep up with NZ IFRS standards
  • Don't have a dedicated in-house personnel resource for lease accounting management

Learn more >

 

Expert lease accounting advice

Expert lease accounting advice

Our lease accounting specialists offer expert technical guidance in the following additional areas:

  • Assistance in determining the presence of a lease in a contract
  • Handling lease accounting for business combinations 
  • Providing advice on make-good provision accounting
  • Recognising subleases
  • Conducting scenario analysis of lease contracts

Contact us > 

 

Lease publications and training content

BDO has a wide array of publications and other training material available. Below is a one-stop-shop of this material for entities to access:

  • BDO NZ IFRS 16 Summary on a Page - High level overview of NZ IFRS 16 requirements conveniently reduced onto 3 pages.

  • BDO In Practice – IFRS 16 Leases - BDO's comprehensive publication on the technical requirements of IFRS 16, including various illustrative examples and commentary on issues currently being encountered in practice.

  • BDO eLearning - BDO’s free online training modules.

  • Thought leadership and blog articles of topical areas of lease accounting application in practice - see tiles below.


Ongoing lease accounting support

Once you pick an appropriate transition method and get to the initial date of application, NZ IFRS 16 does not end there. You must keep your lease information current throughout the year.

These ongoing changes can be generally grouped into the following four categories and numerous subcategories, which all lead to different accounting outcomes:

Ongoing lease accounting support


It is vital any change in a lease arrangement, whether formally agreed with the lessor or not, is treated with the above categories no matter how complicated, as they lead to different accounting outcomes.

Important note: This means that organisations must not only be able to transition to NZ IFRS 16, but their system must be efficient enough to be update leases and make quick changes. This may require a technology investment, as simple Excel sheets will likely prove too difficult to use. 

Our seasoned lease accounting experts are available to advise and consult with entities in working through updates to their lease population changes.

Also, BDO's comprehensive publication on the technical requirements of NZ IFRS 16 (BDO In Practice – IFRS 16 Leases) includes specific detailed sections including illustrative examples and commentary relating to lease population changes.

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James Lindsay

James Lindsay

Partner, Head of Financial Reporting Advisory
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