IFRS 16 will fundamentally change the accounting for lease transactions and is likely to have significant business implications. Almost all leases will be recognised on the balance sheet, with a right of use asset and financial liability that recognise more expenses in profit or loss during the earlier life of a lease.
This will have an associated impact on key accounting metrics, and clear communication will be required to explain to the impact of changes to stakeholders.
Most Communications companies enter into lease agreements both as lessors and lessees. While lessor accounting remains largely unchanged under IFRS 16, leases in the industry are prevalent. The new standard, taking effect officially in 2019, is likely therefore to have a material impact for Communications companies.
Partner, Telecommunications Industry Accounting Group Chairperson
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