Getting ready - 10 questions
Set out below are 10 key questions relating to the adoption of IFRS 16. Can you answer them all with certainty? Please contact BDO for assistance with your implementation project.
- How many leases exist?
- Which leases will be brought on balance sheet?
- Which service contracts contain a lease?
- What transitional approach and options are being adopted and why?
- How will changes in amounts recognised in the financial statements affect bonus payments, share option plans, earn outs, banking covenants and costs, and dividend policy?
- If EBITDA is used as a key performance indicator or the basis for bonus payments, share option plans and earn outs, how do the related agreements need to be changed?
- What changes to systems and processes will be required?
- What are the staff training requirements?
- How have the executive board and audit committee been briefed?
- How will brokers and analysts react?