Entities need to:

• Assess the impact on shareholder value.
• Assess how to maintain public support.
• Assess the impact on their ability to declare dividends.
• Consider the potential impact on their bank covenants.
• Estimate the effects on financial metrics, financial ratios, and financial statements overall.
• Reassess and manage their existing and future lease portfolio.
• Assess whether to exercise renewal and / or termination options.

Entities need to have a full understanding of:

• The three adoption methods, including pro’s and con’s.
• The classification of lease contracts.
• What the journals on the date of adoption will be.
• What the ongoing, business-as-usual journal entries will be.
• The effects on reported results.
• The effects on budgets and forecasts.

Entities need to consider:

• If existing processes are sufficient for new requirements.
• If processes are clear and transparent.
• Levels of automation vs manual input.
• If the IT landscape is too complex for manual calculation.
• Levels of personnel resources to ensure successful implementation.

Entities need to:

• Review levels of personnel to avoid a ‘bottleneck’ in the process of implementing NZ IFRS 16.
• Review tools and processes to ensure they are robust and able to withstand human error (data easily backed up, calculations automated, inputs date and time stamped).
• Review budgeting and forecast processes.

BDO LEAD gives users the opportunity to save leases under review in a central database and the ability to analyse all leases based on criteria.

Information is able to be tailored to fit with an entity’s specific requirements.

BDO LEAD allows entities to manage leases on a quantitative basis.

Once key lease information has been entered, BDO LEAD calculates the Lease liability, and Right-of-use asset.

There are also options to track changes and reassess leases.

BDO LEAD also calculates the interest expense and amortisation expense for the period.

Information stored in the database can be used to analyse leases.

The basic version of BDO LEAD comprises analysis tools that be tailored to the user and sector.

This includes:

• General analysis / queries
• Disclosures in the notes required by NZ IFRS 16.

• Business resources are free for alternative use e.g. to meet key business objectives.
• Saves time consuming training into the details of the new leasing standards.
• Ensures the efficient and timely implementation of NZ IFRS 16 which meets the highest quality standards.

• Opportunity to entirely restructure your lease accounting and lease management.
• BDO LEAD is an intuitive and end user friendly tool.

• Your accounting engine does not need to be adapted.
• BDO can advise on project design and contract evaluation and guide you through the process.
• Tailored to suit your needs e.g. select (modules) functions you need.

• Created by experts in the technical and financial reporting.
• Trust and comfort that you have expert NZ IFRS advisers dealing with lease accounting accurately.

• Safe storage and contract maintenance.
• Direct and clear processes to identify and address issues.
• Increase in transparency.

• Lease recognition is automated, transparent and easier to handle – significantly increasing the efficiency of lease accounting.

• The "Audit log" function allows entities (and their auditors) oversight over all changes and updates that have been made at the click of a button.

Giving you advice on the appropriate transitional method

We assist entities to compare and contrast the impact of the three transitional methods on your financial statements at the date of initial application of NZ IFRS 16 and in future years.

Evaluate which contracts are likely to qualify for the short term and low value lease recognition exemptions

In this context, BDO helps you understand the complex interplay of the requirements to recognise ROU assets as a lease under NZ IFRS

16.

Analysing the entirety of your contracts, allows us to give you advice on the recognition of lease portfolios.

In this way, we help you downsize your lease contract numbers to a manageable number

of leases (portfolios), concurrently reducing the complexity of the recognition of your leases.

Giving entities a greater understanding of your lease contract obligations.

The classification of your lease contracts carried out by us (lease vs. non-lease) makes the identification of future contracts as non-lease easier. In leasing-intensive industries this is particularly valuable as resources are set free for alternative use. Furthermore, we assist in the identification of leases embedded in continuing obligations and the demarcation of non-lease components in a contract.

Professional and organisational advice as both the initial and subsequent measurement generally underlie increasing complexity

BDO IFRS Advisory is happy to advise you in the project design and the contract evaluation process, particularly with regard to the best practice choice.

We would like to support you in the manual capture of your leases or the data fields missing in your databases if digital capture is not or only partially feasible.