The Accounting Standards Committee (ASC) has formally submitted its comment letter to the International Accounting Standards Board (IASB) in response to the Request for Information: Post-implementation Review of IFRS 16 Leases. The submission was published on the ASC website on 10 October 2025.
Key Implications for Preparers and Practitioners
1. Ongoing Evaluation of IFRS 16’s Operational Effectiveness
The ASC’s participation in the review process indicates continued scrutiny of how IFRS 16 is functioning in practice. Stakeholders should anticipate potential standard-setting activities as the IASB evaluates global feedback.
2. Possible Areas of Accounting Complexity Under Review
Although the content of the ASC’s letter is not summarised here, typical areas examined in IFRS 16 post-implementation include:
- Lease classification challenges, particularly around the boundary between service contracts and leases.
- Determination of lease term when extension or termination options exist.
- Discount rate selection, especially for private entities and subsidiaries with limited borrowing rate data.
- Practical application of the low-value and short-term exemptions.
- Complexity in accounting for variable lease payments not based on an index or rate.
Entities should monitor whether these areas were raised by the ASC and consider the potential for future amendments or clarifications.
3. Practical Issues for Financial Reporting
The review may trigger:
- Additional transitional reliefs if the IASB concludes certain requirements impose undue cost or effort.
- Refinements to disclosure requirements, particularly in areas where investors have indicated information gaps.
- Guidance updates that may affect system configurations, accounting policies, and internal controls.
Preparers should assess whether their current lease accounting processes are sufficiently robust to adapt to possible changes.
4. Stakeholder Engagement Recommended
Given the strategic nature of the post-implementation review, organisations may wish to:
- Re-evaluate internal challenges experienced since IFRS 16 implementation.
- Prepare for potential adjustments to accounting policies or interpretations.
- Engage with industry bodies or the ASC for future consultation opportunities.
Source: ACRA, 14 October 2025