Successful LeasePlan webinar outlines action plan on IFRS 16
With over 500 attendants so far and a 90% recommendation rate, LeasePlan's webinar on IFRS 16, broadcast last Monday, was an unqualified success. Quite an accomplishment, considering the complexity of the subject. The webinar focused on practical solutions to the change.
IFRS 16, the new internationally agreed lease accounting standard, has to be implemented for fiscal years containing 1 January 2019. As a result, the lessee (i.e. the leasing client) will have to take the leased assets (including vehicles) onto their balance sheets, as an asset and liability.
The potential implications of this change for vehicle leases are relatively low (as opposed to real estate leases, for instance) but the additional administrative burden can be significant.
On Monday 22 January, LeasePlan hosted a webinar discussing how companies should prepare for the upcoming changes to lease accounting under IFRS 16 (and, by extension, US GAAP ASC842, the U.S. variant). The session outlined a roadmap to implementation, highlighted some challenges companies may face, and educated viewers on two potential solutions.
One was the so-called 'raw data approach': this means that customers can download full details of their global fleet to account for vehicle leases individually. The other was the so-called 'portfolio approach', by which customers group similar individual vehicle leases together and account for these portfolios of vehicles
Together with a Big Four accounting firm, LeasePlan has developed a methodology to implement the second, portfolio approach. Overall, this method aims to reduce the upcoming administrative burden for customers - a key concern for the webinar participants as the implementation date approaches.
Materially, the 'portfolio' methodology produces the same outcome as the 'raw data' approach. However, it significantly reduces the administrative burden of the line-by-line accounting. The approach was successfully tested across all of LeasePlan's fleet for accuracy and robustness.
“42% not yet started”
“Attention and resources are shifting to focus on the new lease accounting rules. Yet even so, 42% of respondents to a survey during the webinar say they have not yet started implementing solutions around lease accounting standards”, said Jef van Oosterbos, Director Commercial Operations at LeasePlan.
“We at LeasePlan have already seen an increase in customer interest in lease accounting over the last six months, as they look to understand how we can support them in preparing for the upcoming changes. Attendance figures for the webinar show that companies are starting to accelerate preparations for the coming changes. We look forward to working with them on what's next in lease accounting”.
The webinar has attracted over 500 participants to date, and based on a feedback survey, over 90% of viewers would recommend the session. Notably, 43% of participants found the portfolio approach solution to be the most interesting section of the webinar.
For more on IFRS 16, see here and here. The webinar remains accessible here.