Retailers Expect Struggle With New Accountancy Standards
4th January 2018.
Up to 90% of UK high street retailers are not keeping competent accountancy records and are potentially living beyond their means, according to analysis by Aptitude Software.
Aptitude Software estimates that a high majority of high street retailers will struggle to comply with new lease accounting standards (IFRS 16) which come into effect in January 2019.
This is in part due to the sheer volume of leased assets across their businesses, including premises, delivery vehicles, machinery and IT equipment.
The new lease accounting standard will demand a high level of data collection, storage and lease accounting that was not previously required
Based on the new standard, all leases over £5,000 will need to be disclosed.
Ross Chapman, global marketing director at Aptitude Software, is not surprised that many UK retailers are unsure of their lease liabilities with many large retailers having more than a thousand outlets. Chapman expects a “data nightmare” for retailers as they are forced to sift through thousands of individual rental agreements.
According to recent figures from the British Retail Consortium, it is not unusual for a large retailer to have between 5,000 and 10,000 leases.
Extra paperwork will not be welcomed by high street retailers at a time when online trading is eating away at High Street sales.
Mr Chapman insists these new standards will help prevent retailers from living beyond their means, laying their paperwork “bare” for thorough scrutiny.
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