Are you coming up to Year End and need to prepare? This article will provide some tips on how to:
- Review the contractual changes in your Organisation over the year to determine where updates are required,
- Update your Agreement Events to reflect the relevant changes that occurred during the year,
- Check that your Agreements are reporting as expected, and
- Review the calculations and values on your Reports for accuracy.
Video Tutorial: End of Financial Year Tips in Nomos One
Check out this video guide with our End of Year Tips:
Start early
As you are aware, the requirements of lease accounting under the IFRS 16 standard can be complex, hence it's always good to start early. By doing so, you will have time to make any required updates, correct any data entry issues, and validate the changes you make by checking the output in the Reports.
If you aren't already, we recommend that moving forward you start to review your Agreements and update them on a more regular basis so that you're not left with lots to do in the final months.
Review your lease portfolio
Reviewing your portfolio is the first step in preparation for year-end reporting. It enables you to identify if there are any Agreements that have not yet been accounted for. It will also help decipher if there are any required updates for your Agreements to reflect scheduled and unscheduled changes that may have occurred in the past financial year.
IFRS 16 is a complex standard, and as human error can occur, there is a chance that there are data entry errors. If you have identified an error and are unsure how to resolve it, please contact our Support Team at support@nomosone.com.
Check all Events are up to date
We recommend running the Upcoming Events Report to check the status of your Events and make sure everything is up to date. Within the report, you are able to see the Event, Agreement name, Time frame, Status, and Scheduled Date.
Alternatively, you could use the Custom Events Report to ensure that all Overdue Events have been completed. This is essential to ensure your IFRS 16 reports pull the most up-to-date information from your Agreement.
Confirm your Agreement is included in reporting
Data entry errors or missing IFRS 16 settings changes (for example, the number of expected renewals) can result in agreements either reporting incorrectly, or not being included in reporting at all.
Check that all of the Renewal options you expect to exercise are included in IFRS 16 calculations. This determination would have been recorded in either:
- The Initial IFRS Settings if they were reasonably expected to be exercised from your Agreement's Commencement date, or
- The IFRS Settings Changes if they were reasonably expected to be exercised from a date after your Agreement's Commencement date.
If you wish to check these details for your entire portfolio, we recommend using the IFRS Settings Report, available in OneLease.
Please note: Expected renewals and other IFRS settings must be included using the correct functionality. For example, if your company revises its expectation from exercising one renewal option to exercising two, and this change is captured in the Initial IFRS Questionnaire, the resulting financial impact will be applied from the Agreement's Commencement date.
Always ensure that you use the IFRS Settings Change Questionnaire to record any changes to IFRS 16 settings. The Questionnaire will apply the financial impact of any recorded changes to the date of the Event that it is used on, ensuring that previous calculations remain correct.
You can also use the Reporting Logs on your generated reports to check if there are any data entry or processing errors preventing your Agreements from being included in the reports.
Review your calculations
Validating calculations is always an important step in your year-end reporting. We encourage you to review your calculations to ensure all the updates processed on your Agreements were done correctly. To do this, we recommend that you use the Journal Report to validate any changes that you make, while being able to filter for a detailed account of financial transactions.
If you require an auditor level of granularity, use our Daily Calculation Report to identify daily transactions. This report can be found on the Agreement Overview page under Payments & Accounting.
Lastly, the Agreement Balances Report is another useful resource for reviewing the details behind the numbers in your financial statements. It provides a breakdown of the Right of Use Asset and Lease Liability accounts by Agreement, as well as the movements in these accounts over a given period. It also allows you to sense-check any adjustments made to an Agreement during the reporting period.
With all this being said, if you notice any variances in the reports, we recommend you use these tips to investigate.
Nomos One does not provide or purport to provide any accounting, financial, tax, legal or any professional advice, nor does Nomos One purport to offer a financial product or service. Nomos One is not responsible or liable for any claim, loss, damage, costs or expenses resulting from your use of or reliance on these resource materials. It is your responsibility to obtain accounting, financial, legal and taxation advice to ensure your use of the Nomos One system meets your individual requirements.