Received 13 December 2019 / Revised 16 January 2020 / Accepted in final form 20 January 2020 / Publish Online 9 February 2020

Abstract

The new IFRS 16 accounting standard represents a shift in regulations. The new standard took effect in January of 2019 and defines a non-cancelable period within a lease term. The new IFRS 16 standards essentially impact lessees to a greater degree than lessors. A gap in the literature exists regarding how the new accounting standard will influence businesses with respect to accounting of leases. Specifically, if leases have a non-cancellable period, it is unclear how it will affect businesses that, in fact, can cancel their leases at will. As such it is important to determine how businesses will account for leases with this change. By increasing clarity in this area, business managers can best make financially apt decisions and adopt regulations. In order to shed light on what businesses will be most impacted by the new IFRS 16, the present study is guided by the following objectives: 1) To determine impact of implementation of IFRS 16 2) To assess options to mitigate potential impacts 3) To gauge benefits of IT-tools as a method of IFRS 16 implementation management. Using a systematic literature review, the present study conducted a search of relevant search terms from four scholarly databases in addition to Google, considering empirical and business news literature published after 2010. Findings include: 1) High-profile businesses were deemed to be most impacted 2) IT tools are available but primarily relate to the effective and accurate practice of accounting methods rather than impacts of regulation. Some businesses use accounting methods such as smoothing to create more advantageous reports 3) Software and IT tools can aid businesses in reducing administrative and human labor costs, along with other benefits. These findings alert company managers with high-value leases of the potential impacts of management tools available for the new IFRS 16 standard.