The purpose of this thesis is to analyze IFRS 16’s impact on the accounting practices for leases in the external annual report. From the year 2019, IFRS 16 will replace the former IASB standard, IAS 17, for all companies constructing annual reports in compliance with the International Financial Reporting Standards. This will affect a large number of companies in industries, where leasing assets is common practice. These industries are mainly the transport and retailer industry where a large quantity of their assets often are leased. Applying IAS 17 required the lessee to categorize its leases in either operational or financial leases of which only financial leases appeared in the balance sheet. Experts, analytics and investors criticized this method and claimed that the financial representation of the company’s leases did not provide a fair and true picture of the company’s financial situation. IASB aims to solve this issue by requiring all material leases to be treated as financial leases and therefore appear in the balance sheet. Through an analysis of the changes in accounting practices, an evaluation will aim to determine the new accounting standard’s capabilities to solve the issues regarding the former accounting standard. This evaluation is supplied with statements from accounting experts and an interview with global IFRS-partner from PwC, Henrik Steffensen. The transitioning to IFRS 16 will affect the financial statement and the examinations performed by equity-oriented stakeholders and debt-oriented stakeholders, who base their analysis on these financial numbers. These stakeholders’ evaluations will be more precise as of the implementation of IFRS 16, since the increase in reported information reduces the need for estimation-based analysis. The new accounting standard will provide a more faithful and transparent view of company’s financial situation, which will have a positive effect on the resource distribution process. This improvement of the financial statement rapport does come to a price, since companies with large quantities of operational leases will experience a complicated and costly implementation process.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||123|