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Why lease accounting isn’t a compliance project anymore
When IFRS 16 came into force, many organisations approached lease accounting as a compliance project: build the lease register, calculate the opening balances, implement the new accounting, move on.
But lease accounting doesn’t really work like that.
The difficult part isn’t necessarily becoming compliant. It’s staying compliant as leases and businesses change.
That distinction is becoming increasingly important. With changes to FRS 102 bringing most leases (for lessees) onto the balance sheet for accounting periods beginning on or after 1 January 2026, another wave of finance teams is going through the transition process. There is a useful lesson from IFRS 16: don’t design the process simply to get through implementation.
Design it for what happens afterwards.
A lease portfolio never stands still
A lease calculation can be perfectly correct on day one and wrong six months later.
Rent reviews happen. CPI-linked payments change. Property leases get extended. Break options get reassessed. Vehicles get replaced. Office space gets reduced. Contracts get renegotiated. Each of these has accounting consequences. This is where lease accounting stops being a technical implementation exercise and becomes an operational finance process.
The challenge is also organisational. Finance may own the accounting, but it doesn’t necessarily control the information.
A property team might renegotiate an office lease. Procurement may sign an equipment agreement. HR may change the terms of a vehicle arrangement. Operations might agree new terms directly with a supplier.
Finance somehow needs to know about all of it.
In practice, one of the biggest lease accounting risks isn’t getting the discount rate slightly wrong. It’s a material change happening somewhere in the business and finance finding out months later.
The spreadsheet question has changed
This changes the debate around spreadsheets. The question isn’t whether Excel can calculate a lease liability. Of course it can.
The better question is whether a spreadsheet is the right place to manage an accounting process involving hundreds of contracts, regular modifications, multiple users, approvals, supporting documentation and recurring journals.
For smaller, static portfolios, spreadsheets may remain perfectly workable. Complexity doesn’t scale neatly with the number of leases. Ten complicated leases can create more work than 100 straightforward ones.
The real test is how easily the process handles change.
If every modification means copying tabs, adjusting formulas, manually updating journals and checking that someone hasn’t accidentally overwritten something, the finance team isn’t just maintaining lease accounting. It’s maintaining the machinery used to produce it.
Audit readiness needs to be built in, not reconstructed
The same principle applies to audit.
A year-end number is only part of the story. Finance teams also need to explain where it came from: what changed, when it changed, which assumptions were used and how the accounting treatment was determined.
Reconstructing that history shortly before the audit is rarely an efficient use of anyone’s time.
Modern finance technology increasingly builds those controls into the process itself: centralised lease data, automated calculations, recorded changes and journals produced systematically. AI might also assist with extracting relevant terms from lease contracts, possibly reducing the manual effort involved in maintaining lease registers.
None of this removes the accountant’s role. If anything, judgement matters more. Technology processes information quickly, but finance professionals still need to understand whether the inputs make sense and whether the resulting accounting reflects the underlying transaction.
From compliance to finance infrastructure
That is the bigger shift. Lease accounting shouldn’t be thought of as something finance teams periodically ‘do’ for compliance. It is increasingly part of the financial reporting infrastructure of the business.
At Rubli, this is increasingly how we see finance teams approaching lease accounting. Not simply automating the initial calculation, but maintaining a central lease register, automating ongoing calculations and modifications, keeping an audit trail, and producing month-end journals and reports as standard. Rubli’s lease accounting technology handles the processing, while finance keeps control over the accounting decisions and judgements that matter.
For organisations now adopting the revised FRS 102 requirements, there is a real opportunity to learn from the experience of IFRS 16 adopters. Rubli helps finance teams manage both the transition and the ongoing accounting, but the principle applies regardless of the technology chosen: don’t build a process that works beautifully on transition day but becomes increasingly difficult to operate afterwards.
The question isn’t: “Are we compliant?”
It’s: “Can we stay compliant without making lease accounting somebody’s full-time spreadsheet job?”
Book a demo of Rubli’s lease accounting software
This is a paid advertisement from Rubli and does not necessarily represent the views of ICAS
When IFRS 16 came into force, many organisations approached lease accounting as a compliance project: build the lease register, calculate the opening balances, implement the new accounting, move on.
But lease accounting doesn’t really work like that.
The difficult part isn’t necessarily becoming compliant. It’s staying compliant as leases and businesses change.
That distinction is becoming increasingly important. With changes to FRS 102 bringing most leases (for lessees) onto the balance sheet for accounting periods beginning on or after 1 January 2026, another wave of finance teams is going through the transition process. There is a useful lesson from IFRS 16: don’t design the process simply to get through implementation.
Design it for what happens afterwards.
A lease portfolio never stands still
A lease calculation can be perfectly correct on day one and wrong six months later.
Rent reviews happen. CPI-linked payments change. Property leases get extended. Break options get reassessed. Vehicles get replaced. Office space gets reduced. Contracts get renegotiated. Each of these has accounting consequences. This is where lease accounting stops being a technical implementation exercise and becomes an operational finance process.
The challenge is also organisational. Finance may own the accounting, but it doesn’t necessarily control the information.
A property team might renegotiate an office lease. Procurement may sign an equipment agreement. HR may change the terms of a vehicle arrangement. Operations might agree new terms directly with a supplier.
Finance somehow needs to know about all of it.
In practice, one of the biggest lease accounting risks isn’t getting the discount rate slightly wrong. It’s a material change happening somewhere in the business and finance finding out months later.
The spreadsheet question has changed
This changes the debate around spreadsheets. The question isn’t whether Excel can calculate a lease liability. Of course it can.
The better question is whether a spreadsheet is the right place to manage an accounting process involving hundreds of contracts, regular modifications, multiple users, approvals, supporting documentation and recurring journals.
For smaller, static portfolios, spreadsheets may remain perfectly workable. Complexity doesn’t scale neatly with the number of leases. Ten complicated leases can create more work than 100 straightforward ones.
The real test is how easily the process handles change.
If every modification means copying tabs, adjusting formulas, manually updating journals and checking that someone hasn’t accidentally overwritten something, the finance team isn’t just maintaining lease accounting. It’s maintaining the machinery used to produce it.
Audit readiness needs to be built in, not reconstructed
The same principle applies to audit.
A year-end number is only part of the story. Finance teams also need to explain where it came from: what changed, when it changed, which assumptions were used and how the accounting treatment was determined.
Reconstructing that history shortly before the audit is rarely an efficient use of anyone’s time.
Modern finance technology increasingly builds those controls into the process itself: centralised lease data, automated calculations, recorded changes and journals produced systematically. AI might also assist with extracting relevant terms from lease contracts, possibly reducing the manual effort involved in maintaining lease registers.
None of this removes the accountant’s role. If anything, judgement matters more. Technology processes information quickly, but finance professionals still need to understand whether the inputs make sense and whether the resulting accounting reflects the underlying transaction.
From compliance to finance infrastructure
That is the bigger shift. Lease accounting shouldn’t be thought of as something finance teams periodically ‘do’ for compliance. It is increasingly part of the financial reporting infrastructure of the business.
At Rubli, this is increasingly how we see finance teams approaching lease accounting. Not simply automating the initial calculation, but maintaining a central lease register, automating ongoing calculations and modifications, keeping an audit trail, and producing month-end journals and reports as standard. Rubli’s lease accounting technology handles the processing, while finance keeps control over the accounting decisions and judgements that matter.
For organisations now adopting the revised FRS 102 requirements, there is a real opportunity to learn from the experience of IFRS 16 adopters. Rubli helps finance teams manage both the transition and the ongoing accounting, but the principle applies regardless of the technology chosen: don’t build a process that works beautifully on transition day but becomes increasingly difficult to operate afterwards.
The question isn’t: “Are we compliant?”
It’s: “Can we stay compliant without making lease accounting somebody’s full-time spreadsheet job?”
Book a demo of Rubli’s lease accounting software
This is a paid advertisement from Rubli and does not necessarily represent the views of ICAS
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