Improved management of leases subject to IFRS 16 with SAP RE-Fx CLM and BTP

Challenge

I.M.A. Industria Macchine Automatiche S.p.A., a world leader in the production of automated industrial machinery, in the context of optimising accounting and IT processes, deemed it necessary to replace the previous system with an integrated tool that fully complies with the requirements for managing IFRS 16, which, as of 2019, replaced IAS 17 in the regulation of leasing for entities that prepare financial statements in accordance with international accounting standards.

The requirement was to provide I.M.A. with a management tool natively integrated with SAP that covered all the requirements of the standard within a limited time frame, as the analysis phase lasted three months, while the actual implementation project lasted seven months.

Another complex aspect of the project was the migration of all data (more than 60 companies and approximately 1,200 contracts) and balances from the previous system to SAP RE-Fx CLM, ensuring that they were correctly transferred and with the necessary accounting entries in order to achieve compliance with financial statement data.

A further complexity of the project was the implementation of advanced reporting specific to the customer’s requirements, which was developed using the Datasphere and BTP solution.

Solution

To meet I.M.A. requirements, the standard features of the module have been implemented through the standard SAP RE-Fx Contract and Lease Management (CLM) feature, specifically:

• Lease contract master data management;
• Standard SAP RE-Fx CLM functions for calculating and recording accounting entries (FI and CO) in accordance with IFRS 16;
• Integration of accounting entries with the asset module (both master data and accounting);
• Multi-currency management with related calculations and accounting entries for exchange rate differences;
• Calculation and accounting entries related to the reclassification of lease liabilities between within, medium and beyond;
• Management of companies with integrated accounting principles using the SAP asset module (SAP AA) and companies without this integration;
• Management of companies not present on the SAP system and therefore to be managed only for the calculation of values;
• Management of extraordinary balance sheet transactions;
• Management of simulation scenarios for budgets and forecasts;
• Use of standard and advanced reporting.

With a view to advanced reporting, ad hoc reports were created using Datashpere and BTP to meet specific customer reporting requirements for group companies, in order to standardise and facilitate communications between the various companies and the organisational unit responsible for preparing the consolidated financial statements.

Data migration was carried out using custom tools provided by Qintesi and adapted to the customer’s specific requirements, ensuring that all data was migrated on time and without any delta compared to the previous custom system.