Thanks to the New Accounting Standard IFRS16 Even More Administration Effort? We´re Saying “No, Thanks”!

Companies, which core business isn´t the field of real estate management, weren´t obligated to account their rented real estates in the past. The standard IFRS 16, which was published on January 13th 2016, regulates the assessment and the reveal of those tenancies newly from January 1st 2019 on. In the future the most tenancies have to be revealed in the balance of accounts.

So far the standard IAS 17 was in effect for the balancing of lease contracts. Herein regulated lessees and lessors were able to design lease contracts so that they can be interpreted as operating leasing or finance leasing. In the most cases contracts were designed to be depicted as operating leasing. Accordingly, affected assets didn´t have to be revealed in the balance of accounts, because a reveal in the attachment was enough. Those are so called “off-balance” positions. The right of choice now drops with the redesign of leasing in form of the IFRS 16. From January 1st 2019 on, all completed and longer than 12 months running tenancies have to be shown in the balance of accounts as assets on the asset side and as liabilities on the liabilities side. The effects are shown to the companies in a balance extension, which has not only effects on important balance sheet ratios due to the increasing liabilities. At the same time with the innovations, the administrative efforts should not to be underestimated, because the new regulations and the consequential balance sheet recognition come along with an audit and a revaluation of all existing contracts.

At this point the RE-FX module in SAP® for the management of existing real estate tenancies turns out to be undoubtedly an advantage. Here, you can manage your rental contracts as well as your specific rental conditions. In this way, users can look at analyses about notice periods, surfaces or renal charges at a glance in their SAP system and may use them for assessments within regulations of IFRS 16. This means that the administrative effort for the employee of the balancing department is reduces significantly. PROMOS offers you in the area of SAP® RE-FX a longtime know how and field-tested program extensions.

In cooperation with our partner CIDEON the solution can be extended to a completely SAP® based Integrated Workplace Management System (IWMS) . The IWMS has been developed specifically for the area of Corporate Real Estate Management (CREM). CREM contains the successful management of real estates, which are used by companies for operational performances in real estate foreign industries. The primary goal is the reduction of costs with the optimal workload of existing capacities as well as the conservation of value or increase of value of real estates. Besides the contract management of IWMS the Corporate Real Estate Management supports in additional areas. For example functionalities for a space, cleaning or move management with CAD integration as well as functionalities for building cost controlling or energy monitoring are implemented. The buildings and areas used by you and which were only working funds now become to success carrier of the company.

You would like to prepare for the upcoming innovations? Feel free to contact us.
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