Keeping a client's lease register under IFRS 16
Keeping a client's lease register in Achekam under IFRS 16 or IFRS for SMEs Section 20, how AI reads a contract, and how leases reach the statements.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Leases are where a small client's statements most often fall short of the standard. The client knows it rents a warehouse, a few vehicles and a photocopier. It does not know the commencement dates, the escalation clauses or which agreements were renewed last year, and the paperwork is in three different places. Without a register, every year-end starts with a hunt for contracts.
Achekam gives the firm a place to keep that register per client, and an AI reader that pulls the key terms out of a lease contract under tight conditions. This article covers the register and the two frameworks it serves, how the contract reading works and what a person must confirm, how lease figures reach the statements, and what the notes will still need.
The register and the two frameworks
Staff can keep a client's lease register under FINANCIALS STUDIO > Leases, under either IFRS 16 or IFRS for SMEs Section 20. Record which framework applies to each client, because the two treat a lessee's leases differently. The IFRS Foundation's summary of IFRS 16 describes its single lessee model, under which a lessee recognises assets and liabilities for its leases unless a lease is short-term or the underlying asset is of low value.
| IFRS 16 | IFRS for SMEs Section 20 | |
|---|---|---|
| Lessee's leases | Most come onto the statement of financial position as a right-of-use asset and a lease liability | Classified as finance or operating leases |
| What the register must support | Measurement of the asset and liability, and their movements | Classification of each lease, and the related amounts |
| Typical reader of the note | Users who expect IFRS disclosure | Users of SME statements |
Treat the register as the firm's working record of the client's leases. A useful one shows each agreement, its parties, its term and payments, and how it is accounted for, so the next year-end starts from a list, not a search.
AI reads the contract, under one condition
Lease contracts are long and inconsistent. Achekam can have AI read a lease contract and produce a draft of the lease's terms. The condition is strict: every number the AI reads must appear in the contract text. A payment amount, a term or an escalation rate that cannot be found in the contract does not belong in the draft.
That rule protects against the most dangerous kind of AI error in this setting: a plausible number that came from nowhere. It does not protect against a number taken from the wrong clause, such as a deposit read as a monthly rental, which is why the next step exists.
A person confirms before anything is used
An AI draft of a lease is not used until a person confirms it. Until then it is a proposal, not an entry in the register.
When confirming, check the draft against the contract itself, clause by clause:
- the parties, and that the lessee is the client;
- the commencement date and the term, including any renewal option the client is reasonably expected to use;
- the payments, their frequency and any escalation;
- deposits, incentives or rent-free periods;
- what happens at the end: return, purchase option or renewal.
Confirming is a judgement as well as a check. Whether a renewal option will be exercised, for instance, is a question for the client and the engagement team, not something a contract reader can settle.
Getting the lease into the statements
The Studio builds a draft set from the mapped trial balance, with every figure calculated in code. Lease amounts therefore reach the statements through the trial balance, like any other balance. The register supports the figures and the note; the entries themselves have to be in the books the trial balance comes from.
Where the lease entries are proposed in Achekam as journals, they are candidates only: a person approves and posts each one, and AI is refused both steps. Whether the entries are posted in the client's own ledger or as year-end adjustments, keep the calculation that supports them with the register, so the reviewer can follow each amount from contract to statement.
Once posted, the fixed, non-AI checks the Validation & Math Engine runs, such as double entry and note ties, apply to the lease lines like any others. The automated review may raise findings for a person to accept, resolve or dismiss; it is advice only and does not block signing.
Notes and disclosures
Notes in the draft take their figures from the mapped trial balance. Lease disclosures, though, need information a trial balance does not hold: descriptions of the leased assets, the terms, and any judgement about options. Where the draft needs such a fact, it is left as [to be completed] rather than invented.
The register is where those facts should come from. Use it to complete the note, and check the policy wording too. The Studio's standard accounting policy wording is based on IFRS for SMEs and labelled for review before issue, so for an IFRS 16 client the lease policy needs to be written for IFRS 16.
A year-end routine for leases
- Ask the client for every lease, rental and hire agreement in force during the year.
- Add new agreements to the register and update changed ones.
- Use the AI reader for long contracts, then confirm each draft against the contract.
- Agree the lease balances in the trial balance to the register's support.
- Complete the lease note from the register.
- Rewrite the lease policy for the client's framework.
Starting the register this year
Start with the clients whose leases matter most: those with property leases or vehicle fleets. One well-kept register makes every following year-end shorter. The wording around the lease note is covered in accounting policies and notes: what is filled in, and how the rest of the draft is assembled in building draft statements from a mapped trial balance.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
