When the revised FRS 102 lease accounting requirements came into effect on 1 January 2026, many finance teams had one primary objective: achieving compliance.
Lease registers were created. Policies were reviewed. Calculations were completed. Reporting processes were updated.
For many organisations, the implementation project was significant, but ultimately successful.
Now, several months later, finance teams have completed one of their first major reporting cycles under the revised requirements.
For many, half year reporting has provided an opportunity to ask a different question.
Is our lease accounting process sustainable?
While compliance may have been achieved, many organisations are now reflecting on whether their current processes are robust enough to support ongoing reporting, governance and future growth.
Compliance is only the beginning
Implementing the revised standard was a significant milestone, but lease accounting doesn’t stop once the initial transition is complete.
Every month brings new challenges:
- New leases being signed
- Existing leases being modified or extended
- Lease terminations
- Changes to assumptions and discount rates
- Ongoing disclosure and reporting requirements
A process that felt manageable during implementation can quickly become difficult to maintain as lease activity increases throughout the year.
For many organisations, half year reporting has been the first real test of those processes.
Has half year reporting highlighted weaknesses?
Finance teams we’ve spoken to are now asking questions that weren’t necessarily front of mind during implementation.
Are spreadsheets becoming a risk?
Many organisations continue to manage lease accounting using spreadsheets.
Whilst spreadsheets may have been a practical way to achieve compliance, they often become increasingly difficult to manage over time.
Common issues include:
- Version control
- Manual calculations
- Limited audit trails
- Key person dependency
- Increasing administration
The question is no longer ‘Can spreadsheets work?’
It’s ‘Are they still the most effective way to manage your lease accounting?’
Do you have a complete lease register?
One of the biggest challenges isn’t performing the accounting. It is knowing exactly what leases exist.
Many organisations are discovering that lease information sits across multiple departments and systems, including property leases, vehicle fleets, equipment leases, technology contracts and service agreements containing embedded leases.
Half year reporting often exposes the gaps that weren’t apparent during the initial implementation, especially with the scrutiny o fan auditor looking over your shoulder!
Managing leases is an ongoing process
Becoming compliant is only the first step.
Finance teams need to manage lease accounting every month, consistently capture new leases, renewals, lease modifications, reassessments and lease terminations.
Can your current process cope with these changes accurately and consistently throughout the year?
Governance and audit readiness
As reporting cycles continue, governance becomes increasingly important.
Consider:
- Could another member of your finance team take ownership tomorrow?
- Are assumptions clearly documented?
- Is every lease supported by the appropriate evidence?
- Can you capture the correct movement analysis on a monthly basis?
- Would your auditors be confident in the processes you have created?
Strong governance doesn’t just support compliance. It reduces risk and provides confidence as organisations move towards year end reporting.
Looking beyond the numbers
The revised lease accounting requirements don’t just affect statutory reporting. They can also influence gearing ratios, net asset positions, banking covenants, management reporting, budget comparisons and EBITDA.
Understanding these wider implications allows finance decision makers to plan ahead rather than react to unexpected outcomes.
Questions worth asking after half year
- Is our lease register complete?
- Are spreadsheets still fit for purpose?
- Are lease changes being captured consistently?
- Is our process fully auditable?
- Could someone else manage the process if key individuals were unavailable (e.g. annual leave, maternity leave, long term sickness)?
- Would you feel confident repeating the process at year end?
- Is the organisation spending more time managing leases than anticipated?
- Is there a more efficient way to manage lease accounting?
Looking beyond compliance
Many organisations have successfully met the revised FRS 102 requirements.
The next stage is ensuring lease accounting is efficient, well governed and scalable for the future. Whether that’s reviewing existing processes, improving governance or implementing dedicated lease accounting technology, making changes now can help reduce risk and ease the pressure of year-end reporting.
How HAYNE can help
At HAYNE, we work with finance teams to improve financial reporting processes through consultancy, implementation and ongoing support.
Whether you’re looking to validate your current approach, strengthen governance or explore dedicated lease accounting software, our team of qualified consultants can help assess your current process and identify practical improvements tailored to your organisation.
If you’d like to discuss your lease accounting process or understand how other organisations are approaching the challenges of ongoing lease accounting, we’d be delighted to arrange an informal conversation.
