International Financial Reporting Standards (IFRS)

IFRS: Impact beyond accounting

International Financial Reporting Standards (IFRS) are the common global language of financial reporting. Set by the International Accounting Standards Board, they apply to areas like Revenue recognition (IFRS 15) and Leasing (IFRS 16).

Meeting the requirements of the new standards has implications that extend much further than accounting. The long-term impact on your company could affect everything from information technology to operations and internal controls.

IFRS: Impact beyond accounting — PwC Ireland.

Changes to the lease accounting standard have a far-reaching impact on lessees' business processes, systems and controls. Lessees will require significantly more data around their leases than before given the on balance sheet accounting for almost all leases. Companies will need to take a cross-functional approach to implementation, not just accounting. For example, key performance indicators (KPIs) will change, remuneration structures linked to these KPIs may need to be restructured and systems and controls processes to comply with the new standard should be implemented. The new standard may affect lessors' business models and offerings, as lease needs and behaviours of lessees change. It may also accelerate existing market developments in leasing such as an increased focus on services rather than physical assets.

The revenue standard introduces several new concepts. Companies should evaluate how the model might affect current business activities, including contract negotiations, key metrics, budgeting, controls and processes. Every industry within the scope of the standard will likely be impacted to some extent, although some industries are expected to be impacted to a greater extent, such as technology, telecommunications and the pharmaceutical sectors.

IFRS 16: Leases

IFRS 16, the new accounting standard for leases, is now effective for annual reporting periods commencing on or after 1 January 2019. The new leases standard IFRS 16 heralds major changes to global lease accounting and will affect a wide variety of sectors.

IFRS reporters are required to recognise a right of use asset and lease liability at the date of adoption of IFRS 16 and to record a depreciation and interest expense subsequent to initial recognition.

The lessor's accounting model largely remains unchanged. The pervasiveness of the changes to lease accounting may require companies to transform their business processes in many areas, including finance and accounting, IT, procurement, tax, treasury, legal, operations, corporate real estate and HR. Some key ratios (such as EBITDA) and KPIs will also change.

*Source: PwC Lease Capitalisation Survey 2016.

IFRS 16 lease accounting tool

The introduction of IFRS 16 Leases represents a fundamental change to lease accounting. Understanding the financial impact of the new standard on your business can be a complicated process requiring detailed calculations and modelling, especially for companies with a large number of leases.

Recognising this, PwC has developed an IFRS 16 Lease Accounting Tool to support lessees who want an accurate, reliable and cost-effective accounting solution. The tool offers a Day-1 impact assessment, plus ongoing journal entries and outputs for business as usual financial reporting under the new standard.


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How we can support you

PwC can help you understand and deliver on the new IFRS reporting requirements. Our experts can provide detailed insight into the various challenges and the impacts these will have on your business and your industry.  

We can provide a detailed diagnostic to identify which parts of your business will be impacted by the new revenue rules, and offer guidance when it comes to reviewing your resources, systems and contract arrangements.

We will also ensure that your people have the skills and knowledge they need to move towards compliance.


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Donal Boyle

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Efe Okome

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Jarlath McKeever

Director, PwC Ireland (Republic of)

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Francis Farrell

Director, PwC Ireland (Republic of)

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