AASB 16 Software Solutions: Choosing the Right Tool for Your Business

The International Accounting Standards Board (IASB) issued a lease accounting standard, AASB 16, which came into effect on January 1, 2019. This standard requires businesses to recognise all leases, including operating leases, on their balance sheets, which has significant implications for companies' financial statements. AASB 16 is a complex standard, and businesses need to choose the right software tool to comply with it. This blog post will discuss how businesses can choose the right tool to comply with AASB 16 and the associated benefits.

Benefits of Using an AASB 16 Software Solution

Using an AASB 16 software solution can help businesses comply with the new lease accounting standard while also reducing the time and effort required to do so. These software solutions automate the lease accounting process and provide businesses with real-time data and insights. With an AASB 16 software solution, businesses can:

Track Their Leased Assets

An AASB 16 software solution can track leased assets, including their location, lease term, and lease payments, which can help businesses manage their leases more effectively.

Comply With Standards

An AASB 16 software solution can automate the lease accounting process, ensuring that businesses comply with the standard's requirements.

Improve Financial Reporting

An AASB 16 software solution can generate accurate financial reports and provide real-time data and insights, which can help businesses make better financial decisions.

AASB 16/IFRS 16 in Practice

Explanation

Under AASB 16, lessees are required to recognise a right-of-use asset and a lease liability for all leases, including operating leases. The right-of-use asset represents the lessee's right to use the leased asset, while the lease liability represents the lessee's obligation to make lease payments over the lease term.

In this example, assume a business leases equipment, real estate, and vehicles. The business determines that the lease term for each asset is 36 months, and the monthly lease payments for each asset are as follows:

• Equipment: $10,000 per month
• Real Estate: $20,000 per month
• Vehicles: $15,000 per month

To record the lease accounting entries, the business would debit the right-of-use asset account for each asset and credit the lease liability account for each asset. The amounts recorded for the right-of-use asset and lease liability would be equal to the present value of the lease payments over the lease term.

Choosing the Right AASB 16 Software Solution

Choosing the right AASB 16 software solution is critical for businesses looking to comply with lease accounting standards. When choosing an AASB 16 software solution, businesses should consider the following factors:

Robust Functionality

The software solution should have robust functionality that can automate the lease accounting process and provide real-time data and insights. This will enable businesses to streamline their accounting processes and make data-driven decisions.

Ease of Use

In addition to functionality, ease of use is also a crucial aspect to consider when selecting a software solution. The software solution should be user-friendly and easy to use, with an intuitive interface that allows users to navigate through the system with minimal training.

Seamless Integration

Integration with existing systems and processes is also an important consideration when selecting a software solution. The solution should seamlessly integrate with the business's existing systems and processes to ensure data consistency and eliminate data silos.

Excellent Customer Support

Finally, it is important to consider the quality of customer support provided by the software solution provider. The software solution should have a team of knowledgeable staff who can provide excellent customer support, assist with any issues or questions, and ensure that the software solution is being used to its full potential.

Introducing Netgain for NetSuite

Netgain for NetSuite is an AASB 16 lease accounting software solution. It helps businesses comply with the new lease accounting standards by providing real-time data and insights. With this solution, businesses can easily automate the lease accounting process, which saves time and improves financial reporting.

Netgain for NetSuite has a ton of robust functionality that is easy to use for all levels of users. The software solution integrates seamlessly with existing systems and processes to provide a hassle-free experience. Additionally, the solution offers excellent customer support, which ensures that businesses can turn to their team with any questions or concerns that they have.

Overall, Netgain for NetSuite is an ideal solution for businesses looking to comply with AASB 16. Not only does it help businesses meet the new lease accounting standards, but it also improves the lease accounting process and financial reporting. By making the lease accounting process more efficient, businesses can focus on other areas of their operations that require attention.

Conclusion

In conclusion, complying with AASB 16 is critical for businesses, and choosing the right software solution is key to achieving compliance. An AASB 16 software solution can provide businesses with real-time data and insights, automate the lease accounting process, and improve financial reporting. 

When choosing an AASB 16 software solution, businesses should consider factors such as functionality, ease of use, integration, and support. By choosing the right software solution, businesses can comply with AASB 16 while also improving their lease accounting process and financial reporting.



For more information on AASB 16, please visit the Australian Accounting Standards Board website.

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