COMMUNIQUE ISSUED AT EXECUTIVE BUSINESS FORUM

August 2, 2018
| No Comments

 

COMMUNIQUE ISSUED AT THE EXECUTIVE BUSINESS FORUM “UNDERSTANDING AND PREPARING FOR IFRS 16” ORGANISED BY THE EQUIPMENT LEASING ASSOCIATION OF NIGERIA (ELAN) HELD ON TUESDAY, 31ST JULY, 2018 AT LCCI CONFERENCE & EXHIBITION CENTRE, ALAUSA, IKEJA – LAGOS

 

  1. BACKGROUND

In furtherance of its objective of promoting the business of leasing in Nigeria and entrenching best practice in the industry, the Equipment Leasing Association of Nigeria (ELAN) recently organised its Executive Business Forum , which was held on Tuesday, 31st July, 2018 At LCCI Conference & Exhibition Centre, Alausa, Ikeja – Lagos. The theme of the forum was ““UNDERSTANDING AND PREPARING FOR IFRS 16” intended among other things, to further enhance members’ understanding of the new standard and assess the level of preparedness of the leasing industry.

The forum was attended by high net worth professionals from within and outside the leasing industry. Paper presentations were done by distinguished Speakers, while the Panelists discussed extensively on the outcomes. The following papers were presented:

  • Understanding and Preparing for IFRS 16 – Titus E. Osawe, FCA, Head, Directorate of Inspection & Monitoring, Financial Reporting Council of Nigeria
  • Impact Analysis of IFRS 16 and Solution Models in the Nigerian Leasing Industry – Christian Chigbundu, General Manager/CEO, Coscharis Mobility Limited

 

This was followed by a panel discussion on the theme. The Panelists were:

Alex Mbakogu, Executive Director/Chief Financial Controller, C&I Leasing Plc and Anne Okwuego, Associate Director, Capital Markets & Accounting Consulting Services, PricewaterhouseCooper Nigeria. The panel discussion was moderated by Andrew Efurhievwe, Executive Secretary, ELAN.

 

  • OBSERVATIONS

 

 

The forum observed that:

 

  1. Given the prevailing trends, IFRS 16 is very apt that would ensure that Lessees and Lessors provide relevant information in a manner that faithfully represents their lease transactions in their financial statements
  2. While, IFRS 16, made significant changes on the accounting for leases by lessees which mainly affect the accounting for operating leases focusing on the elimination of off balance sheet financing, the lessors’ accounting remains largely unchanged from IAS 17.
  3. That leasing businesses will be affected by changes in needs and behaviours of customers which will impact business models, lease products and key lease decisions. Essentially, IFRS16, might be a deal breaker given the elimination of off balance sheet financing which is a major motivation to the lessee.
  4. There is need to begin to strategise to enhance lessors’ capacity and creativity, for improved valuable service delivery in the market place to meet these changes.
  5. That there is need for players to review their lease transactions, controls and processes, and assess the implications of adopting the standard.

 

CONSEQUENTLY, THE FORUM RESOLVED THAT:

 

  1. Lessors should engage the lessees to adopt best options that will meet the diverse needs and interest of both parties to sustain the business of leasing under the new dispensation
  2. That ELAN should engage the Federal Inland Revenue Service (FIRS) to get clarification on the claimant of capital allowance following the implementation of the standard
  3. Players should ensure cordial business relationship with other stakeholders in the leasing value chain, such as vendors to get good bargain for customers
  4. Lessors should constantly create values in their service delivery to their customers as part of efforts to sustain their appetite for leasing
  5. Lessors should be alert and respond proactively to opportunities that the standard presents
  6. Lessors should always encourage best practices and ensure compliance, avoiding issues that may run counter to the purport and intention of the IFRS 16.

CONCLUSION

The forum presented opportunity for members to understand the impact of the new standard on their business. It also challenged them on the need to be proactive in selling lease product and meeting the demands of lessees in the new era. Indeed, the forum has created the consciousness of these issues on IFRS16 and more revelations will emerge as the implementation of standard takes root. Optimistically, the global leasing industry will constantly seek ways to develop new strategies to keep afloat as we journey ahead.

 

Latest News