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Product Jul 04, 2016
Leverton
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LEVERTON API to SAP: Artificial Intelligence can help to comply more easily with IFRS 16 Leases

LEVERTON announced today, that it will present its new API to SAP’s enterprise resource planning (ERP) system at this year’s ‘International SAP Conference on Real Estate Management’ in Berlin.

All corporate real estate managers should be excited about this integration, due to its potential to significantly simplify and accelerate the necessary processes. In addition to that the API can assure compliance to the new IFRS 16 Leases standard.

What is IFRS 16 Lease?

The International Financial Records Standard 16 (IFRS 16) is an accounting standard that establishes principles for the recognition, measurement, presentation and disclosure of leases to ensure that lessees and lessors provide relevant information that faithfully represents those transactions. In other words: most leases must be reported on each company’s balance sheet, for companies reporting under IFRS / US-GAAP; by January 2019.

This new standard affects companies in multiple ways, increasing the mandatory regulatory changes in accounting, and also forces certain business process changes. Technology can help to overcome the challenges and to make compliance easier and faster.

LEVERTON’s artificial intelligence supports fast
and simple IFRS 16 compliance

In order to comply to the new IFRS 16 Leases standard, a company has to execute a multi-step process. LEVERTON can help to facilitate this process and allows for consolidation across all relevant leases throughout various jurisdictions on one platform:

  1. Global consolidation of all lease files

In order to gain an overview of the scale of this new standard, all leases within a company – across countries and jurisdictions – have to be consolidated. How many lease files do you have? In which jurisdiction do they apply? What documents might be missing?

LEVERTON’s solution allows you to simply upload all relevant lease files into one platform, enables a more organized document structure and allows for the identification of missing documents.

  1. Identify lease files that need to comply with IFRS 16

After all lease documentation has been consolidated, the relevant lease files that fall under IFRS 16 have to be identified. Even though the new accounting standard applies to all leases, there are certain exemptions for short term leases (< 12 months) and low value assets. In order to filter out these exceptions, every single lease file has to be checked for those and other data points that determine whether a lease file has to comply to IFRS 16.

  1. Bring relevant data points onto the balance sheet

Finally, after the relevant lease files have successfully been identified, they have to be brought onto the balance sheet. This requires to identify, extract, and aggregate all economic / cash-flow relevant data.

LEVERTON’s semi-automatic extraction of the relevant economic data significantly accelerates the compliance check for all lease files. The deep learning algorithms identify and extract various relevant parameters such as length of lease and provide the relevant data that is needed in order to make a decision whether to bring a lease file onto the balance sheet or not.

LEVERTON’s automated data extraction supports this decision-making in two ways.

  • First, it identifies parameters that qualify a lease file to comply to IFRS 16.
  • Second, it provides an overview of all relevant data points that are needed to report a lease file on the balance sheet including total lease amount, currency, payment frequency, duration and end date, etc.

 

IFRS16-Compliance-Process-Supported-by-Artificial-Intelligence

 

As all calculations and assessments are based on accurate and complete lease information, the process of gathering and identifying the right data is crucial for the compliance project. Inaccurate or incomplete data can have great impact on calculated valuations.

For most companies, the process of abstracting existing lease agreements will be the most time consuming task. This process can be significantly accelerated due to the automated information extraction.

Migrate your IFRS 16 relevant data into SAP

LEVERTON and SAP are currently working on an API that allows you to seamlessly and automatically migrate all extracted data into your ERP system. This will further improve your corporate real estate management and help you to quickly feed your ERP system with complete and accurate data – for IFRS 16 related documents and all other lease files within your global real estate portfolio.

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