Spreadsheets are great…just not for IFRS 16 compliance

In the world of accounting, a spreadsheet is like a family member – something to rely on, something to trust. Spreadsheets are a fundamental part of our accounting environment, but today, they're akin to the classic blackboard.

Relying solely on spreadsheets for your lease accounting needs opens your business up to risks that can be mitigated by using an expert-led, CA-supported platform like LOIS.

Relying on spreadsheets for your lease accounting needs is just like writing on a blackboard: it's reliable and familiar, but out of touch
with the needs of our modern compliance landscape.

Why your business might consider a "spreadsheet solution"

Your business and its people are familiar with spreadsheets, so it makes sense to continue using the known entity.

What could go wrong?

The risk of relying on spreadsheets

If you use spreadsheets in any capacity, you should already know many of the points against. If you have read and understood the requirements of IFRS 16, you will no doubt be conscious of some of the shortcomings of spreadsheets.

In regards to an IFRS 16 solution, the benefits of using a purpose-built platform are plentiful:

• Fast to deploy, create databases, implement IFRS 16, and execute amortisations
• Accessible to a multi-user environment with differing authority levels
• In-built systematic controls including version control, plus being capable of creating its own audit trail
• Consistency in calculations, headings, inputs, validations, rounding, decimal points, and reporting
• Security that ensures integrity, recoverability, and manageability
• All leases are different, but entering the detail as they are contracted needs to be straightforward, intelligible, and consistent. Automation makes that a reality
• Support provided by registered Chartered Accountants
  

Ensuring data integrity

The most fundamental requirement for any system in the new world under IFRS 16 is data integrity.

Spreadsheets lack the critical controls needed to preserve the integrity of your data. Spreadsheets are vulnerable to changes either through deliberate or accidental human interventions that are extremely difficult to isolate and correct.

Just remember, an incorrect formula, misplaced decimal point or percentage, and even a simple typo can dramatically alter the financial position of your organisation. Ensuring data quality through effective data validation is possible using a spreadsheet solution, however this can be a complex and time-consuming process that doesn't take into account other complex areas of the IFRS 16 standard like FX treatment and retail calendars.

The spreadsheet will remain an integral part of our day-to-day accounting needs, but IFRS 16 brings about requirements that highlight the weaknesses of this tool.

In a world that is constantly looking for improvements in performance and efficiencies that drive through to the bottom line, IFRS 16 provides organisations a unique opportunity to review their lease portfolios from a centralised perspective to draw more efficiencies from a process and financial level.

In need of a better solution?

LOIS is a strategic approach to IFRS 16 compliance and has been designed with lease accounting at its core.

If you’re looking for a solution that is superior to spreadsheets, see for yourself by scheduling a demo with one of our IFRS 16 experts.