AI partners with accounting expertise to maintain IFRS 16 compliance

The International Financial Reporting Standard (IFRS 16) came into effect in January 2019, significantly changing lease accounting practices by requiring everything from a real estate lease to a car lease to a fax machine lease to be holistically evaluated, categorised, and placed on the balance sheet appropriately. To combat this change, many organisations adapted technology solutions to help with the heavy lifting.

Enlisting a technology partner to extract data quickly and accurately into a single repository accelerates the transition and facilitates efficient lease management in the long run. Let’s look at a practical example to see how deploying artificial intelligence (AI) technology can simplify the IFRS 16 shift.

With just seven months to go before the IFRS 16 reporting 2019 deadline, a prominent retailer had a tight timeline to implement a lease accounting solution. MRI Contract Intelligence, powered by Leverton AI, was engaged alongside a leading accounting firm to support the 500+ lease IFRS 16 transition. The whole process had been completed ahead of schedule in preparation for the new leasing standards.

Below is an outline of the process from start to finish that highlights the significant benefits of AI coupled with accounting expertise for lease accounting projects.

Phase 1: Determining population and importing of data

  • The accounting partner provided guidance around the relevant lease population for the transition project.
  • MRI Contract Intelligence helped identify problematic or missing contracts.
  • All documents were classified automatically, and Optical Character Recognition (OCR) technology created fully searchable documents regardless of document quality.

Phase 2: Capturing the right data

  • MRI Contract Intelligence extracted the appropriate IFRS 16 data set co-developed between LevertonMRI, technical accounting experts, and the client
  • The process ensured that both IFRS 16-relevant data points and those that would be useful from an ongoing lease management perspective were captured swiftly and accurately.

Phase 3: Data extraction and validation

  • MRI Contract Intelligence used its market-leading AI technology coupled with two layers of quality assurance to provide weekly batch delivery of data.
  • Sample quality reviews were performed by the accounting team, focusing on high risk and high value assets.
  • The result was an accurate, auditable data set.

Phase 4: Ongoing management and auditor communication

  • MRI Contract Intelligence offered a versatile solution, expertly positioned to deal with ongoing lease agreement updates, changes to IFRS 16 data points, and broader real estate management needs.
  • The AI technology streamlined and simplified reporting and audit requirements through transparent, auditable data.

MRI’s AI-powered lease abstraction solution allows the automated processing of assets and all real estate leases. With a pre-built custom IFRS 16 extraction template it can interface the information into your database. MRI Contract Intelligence can also be partnered with accounting systems such as ProLease and MRI Horizon to assist in this extraction process. The system will also provide highly structured data and meet the ongoing compliance standards of the new regulations.

Click here If you would like to learn more about how MRI Contract Intelligence can support your business.

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