The Financial Reporting Council (FRC) has called for improvements in the reporting under IFRS 16 Leases following the first year of its application and has set out its expectations in a recently-issued thematic review, its Annual Review of Corporate Reporting and its year-end letter to Audit Committee Chairs and Finance Directors.

The FRC continues to identify boilerplate rather than entity-specific accounting policies.  It expects companies to:

• tailor the descriptions of their leasing accounting policies to match their particular circumstances and to cover all material areas;
• provide detailed information about the significant judgements affecting their accounting for leases; and
• include sufficient detail to enable a good understanding of the financial reporting effects of their leasing arrangements on their financial position, financial performance and cash flows.

In addition to considering the broader areas for improvement in its thematic review, the FRC also encourages companies to consider whether enhancements are required to IFRS 16 disclosures as a result of COVID-19. These may include amending accounting policies in relation to any lease modifications, in the light of the IASB’s amendments to IFRS 16, as well as clearly communicating any significant changes in judgements companies may make, e.g. relating to lease term, as a consequence of COVID-19. Companies may also need to enhance or introduce estimation uncertainty disclosures in relation to impairment testing of right of use assets.

The FRC will continue to review compliance with IFRS 16 through its routine work.

This page includes all of our resources on IFRS 16.  It includes links to:

• Our guide to IFRS 16 Leases
• our Standards page on IFRS 16 Leases; 
• our comprehensive Need to know publication on IFRS 16.
• our point of view industry-related publications discussing the implications of the new leasing Standard on particular industries and sectors;
• our Robert Bruce Column – Bringing clarity to leases: The new standard;
• an exclusive video interview with former IASB Chairman, Hans Hoogervorst and Deloitte's Global IFRS Leader, Veronica Poole discussing the new Standard on lease accounting; and
• A guide to the incremental borrowing rate — Assessing the impact of IFRS 16 Leases

Additionally this page includes groupings for:

• all of our news items related to IFRS 16; and
• all of our major publications on IFRS 16;