ACCOUNTING POLICIES AND PROFESSIONAL JUDGMENT - APPLICATION OF IFRS 16 "LEASING CONTRACTS"

IFRS 16 “Leases” is the result of the joint effort of the International Accounting Standards Board (IASB) by the US National Standards Standardizer, the Financial Accounting Standards Board (FASB), to improve financial reporting on leasing activities. The two accounting standards normators found that the reported information on operating leases was not transparent and the existence of different accounting models for operational and financial leases reduced comparability for users of financial statements. In addition, the different accounting of financial leasing from operational leasing ‘provides opportunities to structure transactions to obtain a certain accounting result' (Basis for conclusions in IFRS 16, BC 3). In these circumstances, IAS 17 ‘Leasing' has been replaced by IFRS 16 ‘Leases' and applies from financial year 2019. IFRS 16 “Leases” makes significant changes to the accounting for the lessee's leases and the information to be disclosed in the notes to the financial statements. To facilitate its understanding and application, IFRS 16 “Leases” is accompanied by application guidance and illustrative examples. The Ministry of Finance also created the legal framework for the uniform application of the standard by introducing specific accounting accounts in the General Accounts Plan annex to the Accounting Regulations în accordance with International Financial Reporting Standards, approved by Order of the Minister of Public Finance no. 2844/2016, with subsequent amendments and completions. Leasing accounting has been and remains a sensitive area in which professional accountants must exercise their professional judgment in order to assure users of information that the presentation of the items in the Statement of Financial Position / Balance Sheet and the profit and loss account has been made taking into account the fund economic nature of the transaction or commitment in question and not only the legal form of the lease. In the following, we intend to highlight how the application of the provisions of IFRS 16 “Leases” affects the Statement of Financial Position and the profit and loss account for entities that have the quality of lessee in a leasing contract.