5 Things We Learnt at the IFRS 16 Seminar | 20 July 2017

On Tuesday 11^th July, MRI Software (previously Qube Globlal Software) hosted a breakfast networking seminar and IFRS solutions session at The Shard. The event featured presentations on the importance of collaboration between finance and real estate departments when managing IFRS 16 reporting pre, and post January 2019. Attendees were also given the opportunity to network with industry peers, and explore the IFRS 16 functionality in action through informal demo sessions. The sessions were run by our experts in Corporate Real Estate Solutions; Steven Fox, Matthew Eglise and Tom Price, alongside guest speakers, Richard Belgrave, from LEVERTON, and Chris Biggs, from Theta Financial Reporting, who shared their industry expertise on the topic.

Our experts have listed the following five points as the top takeaways from the event:

1. If you haven’t begun to think and prepare for IFRS 16, now might be the time to panic Although the date of the first full year of reporting will be the 2019 year-end (2020 commonly for retailers), there are significant reporting requirements to consider leading up to this – for example, IAS 8’s disclosure of the expected impact of IFRS 16 which needs to be made in each financial statement leading up to the 2019 adoption year, starting in the current 2017-year end. It’s time to start preparing – consider the processes required, software implementations to take place, adoption method decisions to be made, and modelling their different impacts – and as property is a material item, modelling the impact will be an urgent need.
2.  Best practice approach to preparing and implementing IFRS 16 Organisations need to start preparing for IFRS 16 and understand the best way to approach this for their business; from looking at where data is currently stored, how dispersed it is, how it can be collated together, and undertaking a quality cleanse exercise of their current data and understanding what additional information is required for the IFRS 16 calculations.
3. A collaborative approach to a shared IFRS 16 challenge is essential A collaborative approach to IFRS 16 is essential in order to eliminate uncertainty, lack of visibility, the risk of duplicating the volume of work and having two independent approaches to what is a shared challenge. Through utilising and combining the expertise across accounting and real estate management, organisation’s will be able to develop early communication to key stakeholders, minimise the impact on the balance sheet and establish the preferred lease terms for the business moving forward.
4. Technology plays a fundamental role in any organisation’s IFRS 16 project Technology should be at the heart of the collaborative effort in striving to achieve what the business sets out to do; to maximise visibility of the financial position across the entire portfolio and improve the quality of the real estate data, providing one source of the truth across the entire business. Technology can and should enforce, automate and facilitate collaboration through up to date, accurate data and ensuring data is available to both real estate and finance teams, from the initial lease negotiation, through the entire life-cycle through to its extension or termination.
5. The modernisation and automation of lease administration through AI Real estate administration is shifting from manual, time consuming and expensive human processing, to automated, intelligent and computerised processing methods. As opposed to having fatigued data, the real estate world can and should be benefitting from a system that only becomes more intelligent with the more data that it processes. Artificial Intelligence can reduce up to 70% of the time associated with producing a lease abstract over that of a human administrative method. This includes the ability to capture all data required for IFRS 16 calculations whilst also offering significant cost savings.

We hope those who attended the seminar enjoyed the event and found the presentations useful, and would like to thank them for attending.

If you’d like to learn more about any of the topics covered at this event, please don’t hesitate to get in touch.