The new standards on leases, International Financial Reporting Standard (IFRS) 16, Leases and Accounting Standard Codification (ASC), 842, Leases are applicable from 1 January 2019. India is expected to adopt the converged standard from 1 April 2019. The new standards are likely to have significant impact for all companies as lessees. The new requirements will impact not only the accounting and financial reporting by companies, but also their systems, processes, internal controls, procurement, taxes, and operational functions.

In September 2018, KPMG International conducted a survey ‘2018 Global Lease Accounting Survey’ around the world to assess key challenges, companies are facing when preparing to implement and comply with the new leases standards (i.e. IFRS 16 and ASC 842).

Recently, KPMG International issued its report ‘Global Lease Accounting Survey - Lease Accounting is here: Are you ready?’ on key findings derived from the ‘2018 Global Lease Accounting Survey’. The survey examined key challenges businesses were and may still be facing when implementing the new standards.

The survey results present the latest picture prior to the effective date and the variations by region across the world. As per the report, many companies still have work to do even after the effective date of the standards. Those companies that did not fully complete implementation by the effective date will have to rely on interim solutions, while some that have a little bit of a grace period left are still facing a race against time.

The key findings are as follows:

• While under half (44 per cent) had completed a lease inventory, only a quarter had completed an accounting assessment.
• Although nearly half (45 per cent) had selected their lease accounting software, only 16 per cent had developed the system requirements and just 13 per cent had designed their software solution.
• 83 per cent of companies had not yet completed the data gathering and validation step.
• Overall, just three per cent of companies had fully completed their lease accounting compliance projects. Of the remainder, over two-thirds (67 per cent) indicated that they were not on track due to challenges they are facing.

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We hope you find the report to be of interest, and that it provides valuable insights that can help you benchmark against your peers.