Lease Accounting Made Easy: How FMIS Simplifies End-of-Year Reporting

End-of-Year reporting can be stressful for financial teams, especially if they rely on doing most of it manually. A recent survey revealed 79% of finance leaders’ teams are swamped by manual tasks, with 50% saying manual errors were their biggest operational challenge. In addition to human error, teams also face various other challenges, such as complex calculations for right-of-use (ROU) assets and liabilities.

Lease accounting and end-of-year reporting don’t need to be this way. FMIS’ lease accounting software is designed to simplify and automate these and other processes in line with IFRS 16 and ASC 842 accounting standards.

The Challenges of Year-End Lease Accounting

Year-end lease accounting presents a range of challenges, which are all the more difficult to overcome if organisations still use manual spreadsheets. While spreadsheets have their place, updating them takes time that could be better spent on other tasks, and they’re prone to formula and other errors.

Teams may also struggle when calculating complex liability amortisation manually, and trying to keep track of mid-term lease extensions, modifications, or terminations. The limited transparency and control over adjustments offered by spreadsheets and manual processes can lead to audit trail issues and compliance risks. FMIS’ lease accounting software can help overcome these challenges.

Simplified Lease Calculations

There’s much to take into consideration when performing lease calculations for end-of-year reporting. Teams need to juggle formulas, process large lease portfolios, accommodate flexible or irregular payment cycles, and factor in mid-term changes. All this makes for a massive workload, which can be increased if teams make mistakes.

FMIS’ lease accounting software has the features to streamline this process. Teams can use it to automate ROU asset and liability calculations and to process leases in bulk, which means no struggling manually with different formulas or processing leases line by line.

Additionally, the software accommodates quarterly, monthly, flexible, and irregular payments, and it can be used to automate the handling of mid-term changes for greater accuracy. Using FMIS’ software, teams can produce lease schedules for the full life of the lease, record present-value lease payments, and show interest charges per period. FMIS can track non-lease components and show lease liabilities brought or carried forward.

Comprehensive Year-End Reporting

IFRS 16 and ASC 842 accounting standards were introduced in the UK and the USA, respectively, to enhance the transparency and accuracy of global financial reporting. One of the biggest changes ushered in by these standards is that most leases must be recognised on balance sheets. This rule also includes previously off-balance-sheet operating lease obligations.

Under IFRS 16, most leases are treated similarly for accounting purposes, while under ASC 842, there’s still more of a distinction between operating and finance leases, leading to differences in expense recognition and comparability across different accounting standards.

Year-end reporting is much easier with lease accounting software from FMIS. This software offers flexible, customisable financial reporting that complies with the latest IFRS 16 and ASC 842 standards. It also provides lease summaries for all contracts, including short-term and low-value leases.

Teams can use the software to report lease values by period and to access the full details of all leases. The software can generate Excel and PDF reports within seconds, and it allows for data to be exported.

Efficient, Accurate Lease Accounting

In November 2024, the UK public spending watchdog refused to sign off on the government’s public sector accounts for the first time since its establishment. The reason was that only 10% of England’s 426 local authorities submitted reliable data for the UK “whole of government accounts” for the 2022-23 financial year.

Similar challenges of incomplete data affect many organisations, but FMIS’ lease accounting software can help them avoid this by offering a high level of accuracy and providing the transparency and data required for clean audits.

In addition, finance teams can use the software to complete year-end processes and reports in hours rather than days, confident in the accuracy and reliability of the data provided. With a vast workload taken off their plates, teams are free to focus on analysis rather than crunching numbers and compiling reports manually.

Choose Simple, Efficient Year-End Reporting

The massive workload involved in end-of-year reporting isn’t just an inconvenience for organisation finance teams who still complete it manually. It’s also a source of intense stress. According to a recent survey, 34% of UK adults experienced high or extreme levels of stress often, while 91% experienced high stress levels at some point in 2024. 

Putting your organisation at risk of inaccurate data, audit queries, and re-filing, and your employees at risk of burnout, isn’t worth it. Choose FMIS’ solutions for faster, accurate, fully compliant reporting and face the year-end with confidence.