Preparing for your first close in Nextera Accord
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Most of the work in a lease accounting implementation happens before anyone logs in. This page covers that work. It is written for a financial controller or a lease accounting lead.
Before you start
Section titled “Before you start”Decisions your organisation must make
Section titled “Decisions your organisation must make”None of these are system settings, and all of them are audit-relevant. Settling them before configuration is the single largest determinant of how smoothly the implementation goes:
- Reporting framework. IFRS 16, PSAK 116, or both for a dual-reporting group.
- Recognition exemptions. Whether to elect the short-term exemption, and for which classes of underlying asset. Whether to elect the low-value exemption, and what absolute threshold you will treat as low value — remembering that it is assessed on the value of the asset when new, not on materiality to your statements.
- Incremental borrowing rate methodology. How rates are derived, what observable inputs support them, how often they are refreshed, and at what granularity — entity, currency, term band, or asset class. Your auditor will test this.
- Lease term policy. How “reasonably certain” is assessed for extension and termination options, and who signs that assessment off. This is a judgement, and judgements need an owner.
- Materiality and scoping thresholds for contract review — the point below which you will not individually assess a contract, and the basis for that conclusion.
Data you must gather
Section titled “Data you must gather”| Input | Typical owner | Why it is needed |
|---|---|---|
| Complete contract population | Procurement, Legal, each business unit | Completeness is the single biggest audit risk |
| Signed contracts and amendments | Legal / contract repository | Term, options, payment schedules, residual value guarantees |
| Payment schedules | Accounts payable | Splitting fixed, index-linked and usage-based payments |
| Existing lease register | Finance | Reconciliation baseline |
| Discount rate table | Treasury | Liability measurement |
| Chart of accounts and cost-centre mapping | Finance systems | Journal posting |
| Prior-period comparatives | Finance | Transition and disclosure |
A note on the first row: the contract population is where implementations actually fail. Contracts titled “lease” are easy to find; leases embedded in service, outsourcing, warehousing and IT hosting agreements are not, and they are just as much in scope. Budget real time for contract review, and treat it as a completeness exercise across the whole organisation rather than a finance task.
People you need available
Section titled “People you need available”- A lease accounting owner with authority to make the five policy calls above — not to research them, to decide them.
- A contract owner per business unit, because finance does not hold the contracts.
- Someone who can commit the finance-systems side of journal integration.
- Your external auditor, early rather than late. Policy positions agreed with your auditor before implementation cost a conversation; the same positions challenged after your first close cost a restatement of your opening balances.
What “done” looks like
Section titled “What “done” looks like”A first cycle is complete when, for the reporting period:
- The contract population is documented, and every contract has a lease / not-a-lease conclusion with a stated reason — including the ones concluded not to be leases.
- Every in-scope lease has a right-of-use asset and a lease liability recognised at the correct commencement date.
- Period journals — depreciation, interest accretion, payments — are produced and reconciled to the ledger.
- The disclosure set and the liability maturity analysis are generated from the same data as the journals, not rebuilt separately.
- Your auditor can trace any number in the disclosure back to a signed contract.
Note the order: completeness first, then measurement, then reporting. A remeasurement engine cannot compensate for a lease nobody entered, and no amount of system sophistication fixes an incomplete population.
Working through it in the product
Section titled “Working through it in the product”Getting access
Section titled “Getting access”See Getting access to Nextera products. Nextera Accord normally runs
at accord.nextera.id.