The Opal

Wave IFRS 16
Solution
A highly cost-effective way
of addressing the new
requirements of IFRS 16,
ASC 842 and even supporting
dual reporting where both US
GAAP and IFRS reporting is
required in tandem.

UPDATED
July 2018

New Essential Guide

to IFRS 16 Resources
How to remove time,
effort and worry from
your preparations for

IFRS 16 International Financial Reporting Standard (IFRS) 16 - which could be much

more important for your business than it sounds - becomes effective from 1
January 2019. The Opal Wave IFRS 16 solution for SAP BPC reduces time, effort
and worry from your preparations for this landmark measure.
This solution is perfect if you have any form of existing SAP Business Planning
and Consolidation (BPC) installation.
What’s IFRS 16?
IFRS 16 essentially makes accounting for lease assets and liabilities up-to-date and
transparent. It says all lessee leases must be reported on balance sheets, except those
of little value or with terms of 12 months or less. The measure prescribes how revenue or
income from affected leases should be treated, which differs according to whether they
fall into its “operating” or “financial” categories.
Why does IFRS 16 matter?
In addition to potentially prompting awkward conversations with groups such as auditors,
market analysts, journalists and your own board, here are just three reasons why failing to
comply could damage your organisation:
+ It could cost your company business. Actual and potential customers often base
their view of an organisation on its balance sheet, so non-compliance may cause
them to see you as inferior to your rivals.
+ It could breach current funding agreements. Non-compliance could affect, or even
breach, your existing agreements for lines of credit, loans or investments, for example.
+ It could hit future funding. Non-compliance could hinder your ability to secure
finance, such as credit, loans or investments, in the future.
Why should I start
planning for IFRS 16 now?
Because you can’t get your ducks in a row overnight. IFRS 16 is a complex measure, causing
some agreements to no longer be classed as leases and others to start being defined in
this way, for example. Accounting and compliance experts will therefore normally have
to undertake tasks including examining all potentially relevant lease agreements and their
related documentation, to decide whether their reporting requirements are changing and,
if so, how. They will also have to set up systems which generate the information needed in
the future for all leases where disclosure is required.
Implementing our Opal Wave IFRS 16 solution for SAP BPC will ensure you’ll have the
smoothest possible path to compliance if you use it.
IFRS 16 comes into effect on the 1st January 2019, you need to be planning for this now.
What does Opal Wave’s
IFRS 16 solution contain?
It contains a standard IFRS 16 template, comprising all the elements you’ll need
to create and maintain information for the required reporting, including the
necessary administration and calculation functions. The solution has been
thoroughly tested against the guidance model developed by top accountancy
practice Deloitte, which incorporates worked examples and reference data for
purposes such as leases.
Why should I acquire Opal
Wave’s IFRS 16 solution?
Here are just some of the top-line benefits:
+ Versatility. The solution can be deployed with any existing SAP BPC installation.
+ Speed. Deployment is rapid and simple.
+ Leverage your existing set-up and previous investment. The cost-effective
solution enables you to leverage your past spending on SAP BPC. In infrastructure,
no additional installation or roll-out is needed and no new hardware required, plus
you can use your current system architecture. You can also utilise your existing
software, security platform and authorisation settings.
+ Convenience. There’s no need to redevelop or customise existing functionality The solution supports/includes:
and integration with your current consolidation model is seamless. + The importing of existing leases (by use of transformation/conversion files
+ Familiarity. The solution is built in the same familiar software as your existing and data import),
consolidation system, meaning you secure many process and data management + Adding new leases,
simplification benefits.
+ Adjusting existing leases if the lease should need to be extended,
+ No need to learn new skills. Current SAP BPC system owners can extend and terminated early, or otherwise modified,
manage the system without having to learn new skills, while existing users can
+ Leases which are conducted in a currency other than the business unit’s
adopt the new solution, using their current licenses, after minimal training.
local currency,
+ It was developed by experienced experts. The solution has been designed and
+ Leases whose payments are made on a monthly, quarterly, or annual basis,
built by SAP BPC experts, who have delivered solutions meeting customer needs
for many years. + Calculating the lease liability & asset depreciation, and posting these values
to a Consolidation model, and
+ Elimination of risk. Using Opal Wave’s proven solution will avoid the risk of
adopting untried or new technology from an unfamiliar provider. + A lease asset register which can either store lease documents themselves
or hold links to lease documents held in, for instance, a CMS, plus any
supporting text commentary.
Lease Setup
03 The asset depreciation rate, and other lease costs can also be entered:

01
To setup, a new lease, a lease reference member (and its associated properties) is created
using the Lease Setup template (see below). Each lease has an associated lease-currency,
asset-type (e.g. Land & Buildings), and is allocated to a business unit/Entity. In this example,
a United States business unit has taken out a lease on a German warehouse in Euros.
The lease payment frequency can be set to yearly, quarterly, or monthly. Optionally, a lease
can have a text-comment and a link to a document (stored on a network drive, or in BPC’s
own Document Store) assigned.

04 With this data entered, the lease liability calculations can be executed. This will generate
monthly right-of-use asset (RUA) values for the asset cost, depreciation, and lease liability.

02 Once the lease starting period has been chosen, the lease period number, payment, and
discount rate percentage values can be entered using the Lease Input Schedule (see
below). The input schedule will only display:
+ A single period in each year for leases with yearly payment frequencies,
+ A single period in each quarter for leases with quarterly payment frequencies, and
+ All monthly periods for leases with monthly payment frequencies. 05 The lease liability values can be translated into reporting currencies (for example, Pounds
Sterling), and this can be reviewed using the Lease Report:
06
To aid reconciliation between the IFRS 16 leases and the Consolidated reports, the
lease liability data has also been aggregated into accounts which match those in the
Consolidation model.

07
Once satisfied, the data can be approved for Consolidation. A small subset of the balance
sheet is shown below.

08
The details of all leases can be reviewed in the lease catalogue. Double-clicking on the
lease-reference link will display that lease’s calculated liability values. If the lease has a
document link assigned, then this document can be opened by double-clicking on the
“Open” link.

Your Essential Guide to
Important Resources
Concerning IFRS 16
The vital International Financial Reporting Standard (IFRS) 16 becomes effective from 1 January 2019. Our
rapid deployment IFRS 16 solution for SAP Business Planning and Consolidation (BPC) systems reduces
time, effort and worry, as customers prepare for this landmark measure. The application is perfect if you
have any form of existing SAP BPC installation.
Here, we provide links to a selection of important resources dedicated to IFRS 16 from ourselves and
leading accountancy media, professional bodies and firms. These items - all of general application and
available free-of-charge (though some require registration) - tell you more about the standard, including
how to prepare for and implement compliance with it.
Opal Wave resources
Pre-configured solution from Opal Wave: Our page briefly explaining IFRS 16, why it matters and our own
application helping customers with any form of SAP BPC solution comply with it.
Our rapid deployment IFRS 16 solution: A page allowing you to download as a PDF our guide to IFRS 16 and our
solution aiding compliance with it for users of SAP BPC systems.
What is IFRS 16? Our own page, explaining the measure and its significance.
IFRS 16 solution: A post describing the IFRS 16 solution included in our unique SAP BPC Managed Cloud system,
which contains rapid deployment templates enabling users to literally Go Live in a Day™.
SAP BPC IFRS Go Live in a Day™: This five-minute video explains how our breakthrough SAP BPC Managed Cloud
solution, which enables users to literally Go Live in a Day™, aids compliance with IFRS 16.
IFRS compliance? Easy with SAP BPC Managed Cloud: A post explaining how our ground-breaking SAP BPC
Managed Cloud product can aid compliance with IFRS 16.
Key differences between IFRS 16 and IAS 17: Our post explaining the main differences between IFRS 16 AND IAS
17, the international accounting standard which it is replacing.
IFRS 16 implementation and business impact: Here, we look at the likely impact on finance teams and their
businesses, as they grapple with the challenges of implementing IFRS 16.
IFRS 16 impacts on financial statements and reporting metrics: This post does what it says on the tin and contains
a link to a paper from leading accountants PwC, assessing the likely impact of IFRS 16 on different industries.
Accountancy media resources
Accountancy Age e-book: An e-book from Accountancy Age outlining IFRS 16’s requirements, the sectors
affected by it and how to prepare for quick and painless compliance.
IFRS 16 will bring $2.8trn onto companies’ balance sheets: A piece from Economia outlining the background to
IFRS 16, including comment from professional body the Institute of Chartered Accountants in England and Wales
(ICAEW) and major firms.
New IFRS 16 leasing standard explained: An article from Accounting Web, providing an overview of the new
measure, including the reasons for it and the changes it makes to the definition of a lease.
Accountancy body resources
IASB shines light on leases by bringing them onto the balance sheet: The International Accounting Standards
Board’s press release announcing and explaining the publication of IFRS 16.
IFRS 16 leases - putting theory into practice: This booklet, from the ICAEW, covers the planning, transitioning and
accounting elements of IFRS 16.
IFRS 16 leases - FAQs: A booklet from the ICAEW, answers questions such as why it was necessary to change the
way lease accounting works.
IFRS 16 – leases: An overview from the Association of Chartered Certified Accountants (ACCA), covering assets,
accounting for leases, and sales and leaseback transactions, among other topics.
Leading accountancy firm resources (access to some of these
materials requires registration)
IFRS 16 – leases: A page of links from PwC’s Inform arm to resources about IFRS 16, including analyses of its likely
impact on individual sectors and videos for people running businesses.
IFRS 16 - leases: PwC’s website dedicated to IFRS 16, including a series of videos in which the organisation’s
experts discuss aspects of the measure’s implementation.
IFRS 16 – a new era of lease accounting: PwC’s detailed guide to the new standard, including identifying a lease,
lessee and lessor accounting, plus other topics, with some illustrative examples.
IFRS 16, Leases: The leases standard is changing - are you ready? A guide from PwC explaining the financial and
business impacts of IFRS 16, with examples of its practical implications.
It’s finally here - the IASB publishes a new standard on lease accounting: A PwC In Brief bulletin explaining IFRS
16’s key provisions and impact on the financial statements of lessees.
IFRS 16 – leases: This guide, from Deloitte, contains an overview, history and summary of IFRS 16, including its
objectives, scope and exemptions.
IASB issues IFRS 16 – leases: A newsletter from Deloitte, covering IFRS 16’s scope, accounting for leases under it,
and implementing it, among other topics.

IFRS 16 (basic): This e-learning module from Deloitte explains the background, scope, principles and application of
IFRS 16.

IFRS 16 (advanced): Another e-learning module from Deloitte, explaining the background, scope, principles and
application of IFRS 16, but at a higher level than the above.

Leases – a guide to IFRS 16: Deloitte’s 116-page handbook designed to help preparers and users of financial
statements understand the impact of IFRS 16.

Bringing greater clarity to leases – IFRS16: A 14-minute video, in which experts from the International Accounting
Standards Board and Deloitte discuss IFRS 16.

How the leasing accounting proposal might affect your company: EY’s 110-page guide, including illustrations, to
the potential impacts of what was then a proposed accounting standard.

The impact of IFRS 16 on the UK tax position: A document from EY, explaining the changes to tax legislation and
HMRC’s interpretation of it, proposed in the latter’s consultation documents published in December 2017.

Applying IFRS – a closer look at the new leases standard: An almost 120-page guide from EY explaining IFRS,
including its scope, concepts, and what it means for lessee and lessor accounting.

IFRS 16 – leases and lessee implementation: An EY webcast, in which the firm’s experts discuss some practical
aspects of implementing IFRS 16.

IFRS 16 leases - a closer look: A webcast from EY, which includes the firm’s experts addressing issues such as IFRS
16’s requirements, transitioning to it, and frequently asked questions about it.

Leases - a summary of IFRS 16 and its effects: A 28-page EY booklet, containing elements such as an overview of
IFRS 16, its implications and how businesses should prepare for it.

IFRS 16 and tax: navigating the unknown: An article from KPMG exploring potential tax changes concerning
leased assets following IFRS 16’s implementation.

IFRS 16: starting your journey to implementation: KPMG’s piece examining questions such as what you should
do first regarding IFRS 16, which transition option is right for you and how to collate the relevant data.

IFRS 16: what’s the number? An article from KPMG looking at issues surrounding the presentation of lease assets
as a single number on a balance sheet, following IFRS 16’s implementation.

IFRS 16: interactive digital learning: A page providing access to a range of KPMG training materials on IFRS 16,
including an introduction to it plus items on transitioning to it and its definition of leases.
Next Steps
If you want to know more about the IFR16
solution, please contact us.

Call us on 02030 789389 or 01274 800456

or email sales@opalwave.com.

opalwave.com

UK
20 St Dunstan's Hill, London EC3R 8HL
+44 (0) 2030 789 389
City Hub, 9 - 11 Peckover Street, Bradford BD1 5BD
+44 (0) 1274 800 456

Middle East
Residence les 2 Palmiers, Rue Cardinal Sayegh,
El Qalaa, Sin El Fil, Lebanon
+961 (1) 493 566