If you look after fixed assets in an accounting function, IFRS 16 is probably behind you. Having worked on implementation projects at two foreign-owned companies, I want to look at how the standard actually gets operated day to day.

Broadly there are three models:

1. Head office builds a dedicated lease management system
2. Head office maintains an Excel template operated through SharePoint
3. Each subsidiary manages, calculates and posts everything itself

Of the companies I have seen, not one used model 3 — formats diverge across entities and it becomes unmanageable at the centre. So the real choice is between 1 and 2.

Model 1: a central system

Larger groups tend to go this way. Each subsidiary enters its lease contract data; the system calculates and generates the journals; the subsidiary just posts them.

From the subsidiary’s side this is very comfortable once the contract data is loaded — with one drawback that is easy to miss. It removes the learning. The people who worked on implementation went deep: reading the standard closely, entering contract terms, checking the calculated output for reasonableness. Everyone after them can post correct journals without understanding any of it.

Model 2: central Excel

This is the most common arrangement at foreign-owned subsidiaries. The subsidiary enters contract data into a shared file, head office pulls it in, runs the calculation, and posts the entries centrally.

Even less work locally than model 1, and head office keeps full control. The cost is that the subsidiary posts no entries at all — and in a country like Japan where IFRS is not mandatory, head office often does not feed the amounts back either. The local team can end up with no view of the balance sheet and P&L impact of its own leases.

On balance: where there are many subsidiaries and leases are material, model 1 is the better answer.