IFRS 16
IFRS 16 is an international accounting standard introduced to improve transparency in how organisations report leases. In simple terms, it means most lease agreements must now be shown as both an asset and a liability in financial accounts. This applies to everything from office space and warehouses to vehicles and equipment.
Before IFRS 16 many leases were classed as operating leases and didn't appear on the balance sheet. That made it harder to assess a business's financial obligations. IFRS 16 fixes that by ensuring leases are properly reflected in financial reports.
Key changes under IFRS 16
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Lessees must record a right-of-use asset and a lease liability for nearly all leases
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The old distinction between finance and operating leases (for lessees) no longer applies
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Some exemptions still exist for short-term or low-value leases
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Businesses must calculate the present value of future lease payments using a discount rate
Why it matters
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Improves financial clarity for investors, auditors and stakeholders
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Helps track lease commitments and manage renewals more effectively
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Encourages better decisions around leasing vs buying assets
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Ensures compliance with international reporting requirements
The role of software
Managing IFRS 16 manually is complex. Lease management tools like Concerto's IWMS automate:
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Lease data collection and updates
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ROU asset and liability calculations
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Compliance reporting
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Alerts for renewals or remeasurements
For multi-site or global portfolios, this level of automation is essential. It saves time, reduces risk and supports better financial planning.
