If your organisation relies on spreadsheets for IFRS 16 or AASB 16 compliance, these nine warning signs indicate your lease management process has become a liability.
If your organisation relies on spreadsheets or disconnected systems for lease management, there are nine warning signs that the process has become a liability. Each one is a failure mode - either you've already experienced it, or you're exposed to it right now. Individually, they slow your team down. Together, they create material audit risk, compliance exposure, and the kind of financial misstatement that no CFO wants to explain.
The good news is that each sign is also a specific, fixable problem. This post walks through all nine so you can assess where your process stands - and decide what to do about it.
What it looks like: Your finance team spends a significant portion of month-end manually recalculating amortisation schedules, checking formulas, reconciling outputs, and chasing property teams for updated lease terms. The process stretches across two, three, or even four days before anyone is confident the numbers are right.
The consequence: A month-end close that takes more than two days for leases is almost always a signal of manual reconciliation and formula-dependency. The time cost is the obvious problem. The hidden problem is that each manual step is an opportunity for error to enter the data without anyone noticing. When close takes this long, finance teams are also more likely to cut corners under deadline pressure - and that's when mistakes get posted to the general ledger.
What it looks like: When a lease is modified - a rent review is processed, a term is extended, or a CPI adjustment is applied - the change gets made in the spreadsheet and the previous version is either overwritten or saved as a duplicate file. There is no system-generated record of who made the change, when it was made, what it said before, or what triggered it.
The consequence: Auditors will ask for this record. Under IFRS 16 and AASB 16, every modification must be traceable from the source document through to the resulting journal entries. When that trail doesn't exist, your team has to reconstruct it from emails, calendar entries, and memory. That reconstruction is not an audit trail - auditors know the difference, and the process creates significant friction, additional queries, and prolonged audit timelines. For a deeper look at what auditors specifically require, see our IFRS 16 audit preparation checklist.
What it looks like: The property team manages lease events, expiry dates, and rent reviews in their own system or spreadsheet. The finance team runs the IFRS 16 calculations from a separate file. The two are manually reconciled - or, more often, they're not reconciled at all until someone notices the figures don't match.
The consequence: Duplicate data creates material misstatement risk. When a property team extends a lease and the finance team doesn't hear about it for three months, the right-of-use asset and lease liability figures in the financial statements are wrong for that entire period. This is not a theoretical risk - it is one of the most common IFRS 16 audit findings. Finance and property teams operating from different data sources is a structural problem that individual spreadsheet hygiene cannot fix. Our post on why property and finance teams need to talk about leasing covers the specific friction points in detail.
What it looks like: A rent review passed without anyone in the finance or property team acting on it. Or a lease expired and rolled over on unfavourable terms because nobody flagged it in time to renegotiate. The trigger was buried in a spreadsheet that nobody checked that week, or in a calendar reminder that got ignored.
The consequence: There is a direct, quantifiable financial cost when critical lease milestones are missed. A rent review left unactioned can mean months of overpayments at an above-market rate. A lease that rolls over automatically on original terms when market rates have fallen represents a genuine commercial loss. These are not edge cases - organisations managing more than a few dozen leases from spreadsheets will miss dates. It is a matter of when, not if.
What it looks like: One person in your finance team - typically someone who was there during the initial IFRS 16 or AASB 16 implementation - owns "the spreadsheet." They know how it works, where the formulas are, and what the quirks are. Everyone else uses the outputs but would struggle to maintain the model if that person left.
The consequence: This is key-person dependency risk, and it's more common than most finance leaders realise. The risk has two dimensions. First, if that person leaves or is unavailable, your entire lease accounting process is at risk of breaking down or producing incorrect outputs. Second, the spreadsheet itself is a black box - it can be producing errors that nobody else is equipped to catch. Research consistently shows that a high proportion of complex spreadsheets contain formula errors; the problem is that those errors are often invisible until an audit exposes them.
What it looks like: At the end of every reporting period, someone on your team has to manually prepare and post journal adjustments to bring the IFRS 16 figures into the general ledger. The adjustment process is not automated, and it typically involves checking the outputs of one system (or spreadsheet) against another and manually bridging the gap.
The consequence: Manual journal adjustments every month are a sign of a broken data flow - one where the lease accounting process is not integrated with the general ledger. Each manual adjustment is an opportunity for a posting error. Over time, these errors accumulate. They also create a reconciliation burden at year-end and generate audit questions about why the lease subledger and GL don't reconcile automatically. Finance teams managing this manually often spend hours each month on work that a purpose-built platform eliminates entirely.
What it looks like: When your CFO asks for a summary of the organisation's total lease obligations, or your auditors request a complete lease register, the answer is "we'll need some time to pull that together." Data is distributed across files, folders, and systems. Compiling an accurate, complete register requires manual effort from multiple people.
The consequence: This is an audit and board visibility problem. A lease register that cannot be produced quickly is also unlikely to be fully accurate - because if keeping it current is slow and difficult, it probably isn't being kept as current as it should be. Auditors will request your register at the start of the engagement. If producing it takes days, that signals to your auditors that controls around lease data are weak, and the scope of their testing will reflect that concern.
What it looks like: When a CPI adjustment or lease modification occurs, someone manually updates the relevant spreadsheet, recalculates the amortisation schedule, and checks whether the change flows correctly through to the financial statements. The process depends on that person knowing which leases are affected, understanding the correct accounting treatment, and executing the update without introducing errors.
The consequence: Errors accumulate over time. A CPI adjustment that is applied to the wrong base, or a modification where only the payment change is reflected but not the corresponding asset and liability impact, can compound through subsequent periods. Under IFRS 16, each modification type - whether a change in lease term, a change in payment, or a partial termination - has a specific accounting treatment. Applying the wrong treatment manually is easy to do and difficult to detect without a system that validates the inputs. For organisations tracking modifications manually across a portfolio of any meaningful size, the cumulative error risk is material.
What it looks like: During the last audit, your auditors spent more time than expected on lease accounting. They raised queries about specific calculations, asked for documentation you had to reconstruct, or issued a management letter comment about controls around lease data. The questions were resolved eventually, but the process was uncomfortable and time-consuming.
The consequence: When auditors raise questions about lease data accuracy, the risk has already materialised. Past queries are a reliable predictor of future scrutiny. Auditors who identified weaknesses once will test those areas more thoroughly next time. The cost shows up in longer audit timelines, higher audit fees, and - in the most serious cases - audit adjustments or qualifications. This sign matters more than the others because it is no longer theoretical. For a practical guide to what auditors look for and how to address it, our post on keeping auditors happy covers the key controls they expect to see.
When finance teams recognise these signs, they typically respond in one of three ways.
Option 1: Ignore it. The process has worked so far, and an audit hasn't forced the issue yet. This is the most common response and the highest-risk one. The signs listed above tend to worsen as lease portfolios grow in complexity, not resolve themselves. When the issue does surface during an audit, the cost is significantly higher than it would have been to address it proactively.
Option 2: Patch with more spreadsheets. Add a new tab, build a new check, send a new calendar reminder to the property team. This addresses the immediate symptom without resolving the underlying structural problem. The patched spreadsheet is more complex than the original, which means more potential failure points and a deeper key-person dependency. Most finance teams that have been managing IFRS 16 in Excel since 2019 are on version three or four of this approach, and the compounding complexity is a risk in itself.
Option 3: Move to purpose-built lease accounting software. A dedicated lease platform eliminates the structural causes of most of these signs. It automates IFRS 16 and AASB 16 calculations, generates journal entries directly, maintains a complete and timestamped audit trail, and provides a single source of truth accessible to both finance and property teams. Reminders for rent reviews and lease expiries are automated. Producing a complete lease register takes seconds, not days.
LOIS is a purpose-built lease accounting and management platform built and supported by CA-qualified lease accounting specialists. It is designed to handle portfolios from 30 leases to over 10,000, and it unifies finance and property teams in a single system - eliminating the data silos that create most of the risks described above. If several of the signs above look familiar, it is worth exploring what LOIS does and how quickly organisations can onboard. For context on what the transition from spreadsheets looks like in practice, our post on why spreadsheets fall short for IFRS 16 compliance is a useful starting point.
An audit-ready lease accounting process has four characteristics: a complete and current lease register, a modification log that records every change with the trigger, effective date, and resulting journal entries, documented discount rate methodology for each lease, and a reconciliation of the IFRS 16 subledger to the general ledger that can be produced on demand. If any of these four elements would take significant time or effort to produce, the process is not audit-ready. The most reliable test is to ask your team how long it would take to respond to a request from an auditor for each of these items. The answer tells you where the gaps are.
The primary risks of managing IFRS 16 in Excel are formula errors that go undetected until audit, key-person dependency where one person understands how the model works, no automated audit trail for modifications, and the inability to maintain a single source of truth between finance and property teams. Research has consistently shown that a high proportion of complex spreadsheets contain errors. For IFRS 16, where calculations are sensitive to inputs like the incremental borrowing rate and where every modification requires a specific accounting treatment, those errors carry material financial statement risk. The risk compounds as the portfolio grows and more modifications accumulate.
A lease management audit trail is a system-generated record of every change made to every lease in a portfolio: who made the change, when it was made, what the previous values were, what triggered the change, and what the financial impact was. Under IFRS 16 and AASB 16, auditors expect to trace every lease modification from the source document - the signed amendment or addendum - through the revised amortisation schedule to the journal entries posted in the general ledger. An audit trail must be generated automatically by the system as changes occur. A spreadsheet does not produce an audit trail; it shows only the current state of the data, and any change history must be reconstructed manually, which is not accepted as equivalent.
The practical threshold is lower than most finance teams expect. Organisations managing 30 or more leases - especially where those leases include modifications, CPI adjustments, or multiple asset types - are typically at the point where the operational and compliance costs of spreadsheet management exceed the cost of a dedicated platform. The clearest trigger is the presence of any of the nine signs listed in this post: month-end close taking more than two days, missing audit trail, data silos between finance and property, missed milestones, key-person dependency, manual GL adjustments, slow lease register retrieval, manual modification tracking, or prior audit questions about lease data. If two or more of these apply, the case for purpose-built software is strong. The transition from spreadsheets to a platform like LOIS is faster than most teams anticipate - standardised upload templates and a structured onboarding process mean most organisations are operational in weeks, not months. See our CFO's guide to lease management centralisation for a practical framework for evaluating the switch.
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