Compliant books are essential. If your accounting team cannot maintain compliance, your company could face serious financial and legal consequences. However, as in many other business areas, accounting standards like AASB 16 bring a new set of challenges.

Introduced in 2019, AASB 16 removed the distinction between operating leases and finance leases. This change significantly increased the complexity of lease accounting, especially for bookkeepers and finance teams. Below, we explore the most common challenges created by AASB 16 and outline practical solutions to overcome them.

More intense data gathering under AASB 16

Accounting has always involved data gathering, processing, and reporting. But under AASB 16, the volume of data and the level of detail required has increased substantially. Accountants now need the tools to handle large datasets and complex calculations with precision. This shift creates a strong case for upgrading to modern software solutions.

Fortunately, cloud-based systems have removed the need for powerful local hardware. As a result, businesses can scale their accounting operations without expensive IT upgrades. AASB 16 requires companies to recheck their books, adjust balances, and change how lease accounting is done going forward. For example, lease and non-lease components now need to be separated and accounted for individually.

The larger the business, the more difficult it becomes to maintain accurate and up-to-date lease accounting records. As the number of leases grows, tracking metrics for each contract and the overall lease portfolio becomes extremely time-consuming. Cloud-based solutions, like SOFT4Lessee, can greatly simplify this process.

More benefits from software

With the complexity of AASB 16, more companies are relying on modern digital solutions. While some may view this reliance on software as a weakness, in the context of repetitive administrative tasks, it's actually a strength. Software helps reduce the time spent on manual work that adds no strategic value - such as number crunching or preparing reports from scratch.

SOFT4Lessee is designed specifically to support AASB 16 compliance. It suits businesses of all sizes and provides ready-made templates, automated calculations, and compliance features out of the box. By using software, your staff can avoid unnecessary manual tasks and focus on higher-value work. Plus, SOFT4Lessee is easy to learn, making onboarding smooth and fast.

Accounting isn’t a one-department effort

It’s a common misconception that lease accounting is the sole responsibility of the finance team. In reality, other departments - including administration, procurement, and sales - often need to collaborate with accounting to ensure data accuracy.

Effective AASB 16 lease accounting depends on clear communication between teams. Proper data exchange improves the accuracy of reports and minimizes delays. Since the new standard increases the data and documentation required, alignment across departments is more important than ever.

Staff training and change management

Every new technology or standard has two sides: the technical side and the human side. For AASB 16, the technical side is covered by modern tools like SOFT4Lessee, which offer everything needed for lease accounting in compliance with the latest regulations.

The human side is more challenging. Leaders must not only introduce new tools but also ensure staff are trained and understand the benefits of the transition. In many companies, failure to train staff has led to delays, errors, and burnout. Some organizations are even unable to free up time for training because there aren’t enough skilled team members to cover daily tasks.

This is why training must be part of the initial implementation plan. Companies that invest early in training are better positioned to manage the increased administrative workload of AASB 16.

Final thoughts

What are the biggest challenges created by AASB 16? First, the removal of the line between operating and finance leases has forced companies to collect and report more detailed data for every lease and for their entire lease portfolio. This has increased the need for modern software solutions, like SOFT4Lessee, that support automation and help reduce time spent on manual processes.

As accounting has become more demanding, businesses have also improved collaboration between departments to ensure that lease accounting stays on track. By embracing the right tools and training, companies can turn AASB 16 compliance from a burden into an opportunity to modernize and improve efficiency.