A regional oil and gas company
Technologies used: Excel, VBA, Power Query
Challenge
As of January 1, 2021, the client was legally required to comply with IFRS 16 standards and include related calculations in their financial statements. However, due to group policy, the client also needed to retroactively perform IFRS 16 calculations from January 1, 2019, to meet management reporting requirements.
This presented several challenges:
Managing a large volume of contracts with varying terms and conditions.
Ensuring compliance with strict reporting deadlines.
Eliminating risks of errors from manual calculations and decentralized data management.
What is IFRS 16?
IFRS 16 is an international standard that establishes principles for the recognition, measurement, presentation, and disclosure of leases. Its purpose is to ensure that both lessees and lessors provide relevant information about the effects of leasing transactions. This information allows users of financial statements to assess the impact of leases on an entity's financial position, financial performance, and cash flows. When applying this standard, entities must consider all relevant contract terms and circumstances, applying the standard consistently across similar agreements.
Solution
DAX Analytics developed a tool that fully automates IFRS 16 calculations, providing the client with the ability to manage complex processes through a centralized contract database and consolidated report. The solution was designed to ensure accuracy and efficiency in processing a large volume of contracts, allowing the team to focus on analysis rather than manual tasks.
Key Components
Contract Database with Individual Calculations – The tool includes a contract database that allows for easy addition of new contracts, updates to existing ones, and entry of changes through annexes. This ensures accuracy in tracking each contract and its terms. Calculations are automated and stored in a separate folder for easy access and organization.
Customized IFRS 16 Add-in – A specialized add-in was created to allow individual calculation for each contract. This add-in speeds up the calculation process, enables exchange rate updates, and supports posting scheme updates without additional manual work.
Consolidated Report and Posting Structure – The final report (IFRS-16 Consolidated Calculations) allows the client to refresh all data with a single click and generate journal entries according to the latest data. Consolidated data is clearly structured, with dedicated sections for tracking payments and amortization, as well as generating reports for both management and statutory needs.
Benefits
The implementation of this solution has provided the client with significant time savings and improved management of IFRS 16 calculations. Key benefits include:
Transparency and Control over Contracts – Company now has a centralized and transparent view of all contracts, including historical calculations and adjustments. This reduces the risk of errors and makes it easier to manage calculations across different posting schemes.
Adaptability and Flexibility – The tool allows the client to easily add new contracts or adjust existing ones. For example, when adding contract annexes, the team can quickly activate a new calculation and maintain continuity in reporting without disrupting existing data.
Time and Resource Savings – Instead of relying on manual calculations, which were time-consuming and error-prone, company now uses an automated system that quickly generates accurate calculations, allowing the team to focus on analyzing results.
With DAX Analytics’ IFRS 16 solution, the client has achieved a more efficient and controlled process that meets both statutory requirements and management reporting needs.
Conclusion
DAX Analytics' tailored solution has transformed the client's IFRS 16 process into an efficient, controlled, and reliable system. The client is now better equipped to meet regulatory demands while focusing on strategic decision-making.
This project demonstrates the value of custom-built tools in tackling complex accounting challenges, enabling organizations to enhance their financial operations and maintain compliance with evolving standards.
