The auditors arrive and one of their first requests is the IFRS 16 disclosure note. Your finance manager pulls it together from three separate spreadsheets, a tab in the amortisation workbook, and a prior-year note in the Word document. The depreciation figure on the income statement reconciliation doesn't match the rollforward table. The maturity analysis uses discounted figures instead of undiscounted ones. The weighted average discount rate hasn't been updated since transition. This is not a hypothetical. It describes how IFRS 16 disclosures are assembled at a significant number of organisations every year-end, and it is one of the most common sources of audit friction under the standard.
Updated May 2026.
IFRS 16 paragraphs 51 to 60 set out the disclosure requirements for lessees. The objective, stated in paragraph 51, is straightforward: disclosures must give users of financial statements a basis for assessing the effect of leases on the entity's financial position, financial performance, and cash flows. What that objective demands in practice is considerably more involved. This guide covers every required disclosure, which paragraph requires it, what underlying data it draws on, and where the most common deficiencies arise.
For Australian reporters, AASB 16 is substantively identical to IFRS 16 for lessee accounting. The paragraph numbers and disclosure requirements are the same. New Zealand reporters follow NZ IFRS 16, which applies the same disclosure framework. All references to IFRS 16 in this guide apply equally to both standards.
IFRS 16 paragraphs 51-60 group lessee disclosures into three categories: quantitative disclosures (paragraph 53), the maturity analysis (paragraph 54), and qualitative disclosures (paragraph 52). Paragraph 53 specifies that the quantitative items must be presented in a tabular format unless another format is more appropriate. Paragraph 58 adds that lessees shall provide additional qualitative and quantitative information about their leasing activities as necessary to satisfy the disclosure objective in paragraph 51. That "as necessary" clause matters: a highly standardised, low-judgement portfolio and a mixed portfolio of property, fleet, and equipment with several extension options carry different disclosure burdens.
The IFRS Foundation publishes the full text of IFRS 16 at ifrs.org. The disclosure requirements sit in Section 6 of the standard. What follows is a practical breakdown of what each requirement means for a finance team producing the annual note.
IFRS 16 requires lessees to disclose the following quantitative items, which together form the core of the lease note in the financial statements. Each item maps to a specific data source in the lease register. Understanding that mapping is the difference between assembling the note reliably and rebuilding it from scratch each period.
| Disclosure item | Paragraph | Data input required |
|---|---|---|
| Depreciation charge for ROU assets, by class of underlying asset | 53(a) | Amortisation schedule for each lease, summarised by asset class (property, vehicles, equipment, etc.) |
| Interest expense on lease liabilities | 53(b) | Interest column from each lease's liability amortisation schedule, aggregated across the portfolio |
| Short-term lease expense (not included in depreciation above) | 53(c) | Payments made on leases under 12-month term exemption, tracked separately in GL or register |
| Low-value lease expense (not included in depreciation above) | 53(d) | Payments on low-value asset leases expensed directly; assets typically under USD 5,000 new value |
| Variable lease payments not included in lease liability measurement | 53(e) | Turnover-based rents, contingent rents, or service charges excluded from liability; tracked via GL |
| Total cash outflow for leases | 53(g) | All lease-related cash payments during the period: principal, interest, short-term, low-value, and variable |
| Additions to ROU assets during the period | 53(h) | New leases commenced and modifications treated as new leases, drawn from commencement schedules |
| Closing carrying amount of ROU assets, by class | 53(i) | Cost less accumulated depreciation less impairment per class, from ROU asset rollforward |
| Carrying amount of lease liabilities (current and non-current) | 53(k) | Present value of remaining lease payments, split by payments due within 12 months and beyond |
| Maturity analysis of undiscounted lease liabilities | 54 | Future contractual payments before discounting, in bands: under 1 year, 1-5 years, over 5 years; reconciled to balance sheet carrying amount |
| Weighted average lessee's IBR (if portfolio approach used at transition) | 55 | Weighted average IBR across active leases, calculated by lease liability balance; required where paragraph C5(b) practical expedient was applied |
Two of these items deserve particular attention because they are so frequently incomplete. The ROU asset rollforward (items 53(a), 53(h), and 53(i) combined) must show the full movement: opening balance, additions from new leases, upward and downward modifications, depreciation charged in the period, impairment losses if any, and the closing balance, all by asset class. Many finance teams present only opening, depreciation, and closing, omitting the modification and addition columns. The lease liability rollforward must show: opening balance, new leases commenced, interest accretion during the period, lease payments made, movements from modifications and reassessments, terminations, and the closing balance split between current and non-current. Omitting the interest accretion line or combining it with payments is a disclosure deficiency auditors flag consistently. For more on how ROU assets are calculated and depreciated, see the guide to right-of-use assets under IFRS 16.
IFRS 16 and IAS 7 together govern how lease-related cash flows appear in the statement of cash flows, and the classification is materially different from the pre-IFRS 16 treatment. Getting it right matters both for the cash flow statement itself and for the total cash outflow disclosure required by paragraph 53(g).
Principal repayments on lease liabilities are classified as financing activities. This reflects the economic substance: paying down a lease liability is structurally the same as repaying a loan. Under the old IAS 17 operating lease treatment, these same payments appeared in operating activities as lease expense. Many organisations whose GL journals were set up at IFRS 16 transition still have the residual habit of treating all lease payments as operating outflows, and the error compounds silently until someone traces the cash flow classification end-to-end.
Interest paid on lease liabilities can be classified as either financing or operating activities under IAS 7's accounting policy choice (paragraph 33 of IAS 7). Whichever classification is chosen, it must be applied consistently, disclosed as an accounting policy, and presented separately from principal repayments in the note.
Payments on short-term and low-value asset leases are expensed directly to the income statement (no balance sheet recognition) and the corresponding cash outflows sit in operating activities.
Variable lease payments not included in lease liability measurement (such as turnover-based rents) are expensed as incurred and their cash flows appear in operating activities.
The paragraph 53(g) requirement to disclose total cash outflow for leases means all of the above categories must be aggregated and presented as a single total in the note, even if the components sit in different sections of the cash flow statement. This is the figure auditors use to verify that the lease note and the cash flow statement are internally consistent.
IFRS 16 paragraph 52 requires lessees to disclose information about the nature and extent of their leasing activities and the judgements applied. These qualitative disclosures are not a boilerplate exercise. Auditors read them alongside the numbers, and a qualitative note that describes a policy inconsistent with the calculations in the quantitative table is an audit finding in itself.