IFRS 16 Post-Implementation Review

When IFRS 16 was introduced, it changed the way leases are reported, bringing most leases onto the balance sheet. While this improved transparency, it also created new challenges for public sector organisations – from understanding lease terms to managing the additional accounting workload.

Recently, the European Financial Reporting Advisory Group (EFRAG) published its post-implementation review of IFRS 16. The review confirms that the standard is generally performing well, but highlights several areas where organisations struggle.

Key challenges Identified by EFRAG

The review noticed that many organisations face the following issues:

• Scope and classification – uncertainty about whether some contracts, such as software licences or cloud services, should be treated as leases under IFRS 16.
• Judgement and complexity – distinguishing between a lease and an in-substance purchase remains difficult in practice.
• Disclosure and presentation – organisations need clearer guidance on how to report lease-related cash flows and financial information.
• Interaction with other standards – applying IFRS 16 consistently alongside IFRS 9 and IFRS 15, particularly for lease modifications and sale-and-leaseback transactions, continues to cause confusion.

These challenges underline that IFRS 16 compliance isn’t just a finance issue, but an organisational one too. For many public sector organisations, navigating these challenges requires specialist support to ensure compliancy while continuing to reap the benefits of leasing.

Leasing is still a solution, it just needs our support

IFRS 16 hasn’t changed the benefits of leasing – it has changed how organisations need to manage and account for leases. Leasing remains a flexible, efficient way to access essential assets without the large upfront costs, while ensuring financial and operational control.

Our team works with public sector organisations to make leasing work effectively. We can help you to:

• Develop robust business cases that align with both revenue and capital budgets.
• Navigate accounting requirements without compromising operational goals.
• Maximise value for money through compliant and sustainable lease arrangements.
• Stay in control of your leasing portfolio across its full lifecycle.

With expert guidance, leasing remains not only a suitable option, but essential to achieving long-term value.  Contact our Leasing Team today at psleasing@csltd.org.uk.