Why lease accounting now demands a smarter system

When it comes to compliance, finance leaders tend not to gamble. But in lease accounting, many still rely on spreadsheets: fragile, error-prone, and unfit for the demands of modern regulatory standards.  

With FRS 102, IFRS 16 and ASC 842 continuing to reshape how leases are recognised and reported, one thing is increasingly clear. Excel is no longer enough. 

Lease accounting has shifted from a niche compliance function to a critical area of financial governance.  

That shift demands new levels of accuracy, auditability, and control. It’s no longer just about reporting figures. It’s about understanding the full impact of leases on your balance sheet, income statement, and strategic decision-making. 

Yet the tools many teams still rely on haven’t kept pace with that responsibility. 

The invisible cracks in spreadsheet logic 

Spreadsheets are deceptively comforting. They offer flexibility, familiarity, and an illusion of control. But beneath that surface, problems multiply. 

Each time a spreadsheet is copied, altered, or updated, the audit trail becomes harder to follow. Key formulas may be overwritten. Links to external files might break. By the time year-end arrives, what once looked like a clear calculation becomes a black box: difficult to justify, harder to verify. 

Then there’s the matter of scale. As lease portfolios grow – covering property, vehicles, equipment, and more – spreadsheets become harder to manage. They were never designed to track complex terms, multiple currencies, or lease modifications. Nor do they support collaboration between departments. 

And perhaps most critically, they’re built on personal knowledge. Many firms rely on a single person (or a small team) who knows how the lease files work. If they leave or change roles, institutional memory vanishes with them. 

These risks aren’t theoretical. Audit reports continue to flag lease accounting as an area of material weakness.  

In 2023 alone, multiple UK-based organisations faced restatements due to incorrect lease treatment, often attributed to manual miscalculation or inconsistent application of standards. 

New standards, new stakes 

Regulatory standards like IFRS 16 and FRS 102 have fundamentally changed lease accounting, turning off-balance-sheet obligations into recognised assets and liabilities. The goal is transparency. But achieving that transparency without the right tools often creates additional complexity and overhead. 

For example: 

• IFRS 16 requires detailed remeasurement of lease liabilities based on changes in terms, discount rates, and usage. 
• FRS 102 demands specific treatment for operating vs finance leases, with disclosure requirements that vary across sectors. 
• ASC 842, affecting UK businesses with US entities or investors, adds yet another compliance layer, with implications for dual reporting. 

The cumulative burden of staying on top of these changes and proving compliance to auditors, boards, and regulators makes it harder for finance teams to meet their deadlines without risking errors. 

The financial and reputational risks of non-compliance are rising. But so too are the opportunity costs of continuing with manual systems. 

 More time spent on reconciling spreadsheets means less time available for strategic analysis, forecasting, and business partnering. 

The smarter alternative: purpose-built lease accounting software 

Modern lease accounting software addresses these challenges head-on. These platforms are designed not just to record leases but to manage them across their entire lifecycle, and across multiple jurisdictions. 

What sets this software apart? 

• Audit-ready by design: Every change is logged. Every calculation is transparent. This creates confidence with internal stakeholders and external auditors alike. 
• Integrated data flows: Lease systems can connect directly with your ERP, asset management, and general ledger systems, ensuring consistency and reducing manual duplication. 
• AI-powered logic: Smart technology flags inconsistencies, automates remeasurements, and updates calculations as standards evolve. 
• Scalability and control: Whether you have 50 leases or 5,000, the system doesn’t break, it just works. And it works for property, fleet, equipment, and more. 
• Reporting on demand: Generate disclosure-ready outputs, board-level summaries, or scenario models in minutes, not weeks. 

The end result is faster month-end closes, fewer surprises during audit season, and a finance team that’s free to focus on value-added tasks instead of spreadsheet firefighting. 

MRI Software: Global strength, local expertise 

MRI Software stands out as a leading lease accounting and management solution provider that combines the scale of a global organisation with tailored UK support.  

While the company operates in more than 170 countries, its UK footprint is significant, with dedicated teams who understand the nuances of FRS 102 and the specific expectations of British regulators and auditors. 

MRI’s lease accounting software is designed to support compliance with IFRS 16, FRS 102, and ASC 842, helping clients across the private and public sectors eliminate manual errors and ensure ongoing accuracy. 

AI is a key differentiator in MRI’s offering. The software uses machine learning to flag anomalies, suggest lease remeasurements, and ensure inputs stay aligned with compliance rules.  

This reduces reliance on memory, improves consistency, and helps firms prepare for audit reviews with confidence. 

Why now is the moment to act 

Lease accounting software isn’t just about ticking regulatory boxes. It helps organisations reduce risk, improve collaboration, and build more resilient finance operations. 

Spreadsheets concentrate knowledge in a few individuals. Software distributes it across teams. Spreadsheets break silently. Software flags errors. Spreadsheets get lost in inboxes. Software keeps a full audit history in one place. 

In a world of hybrid working, changing audit requirements, and rising regulatory pressure, resilience matters more than ever. 

For some organisations, the tipping point is audit feedback. For others, it’s the pain of reconciling lease figures across business units. Whatever the trigger, more finance leaders are recognising that spreadsheets can no longer carry the weight of lease compliance. 

There’s also growing investor pressure for transparency. Boards want timely reporting and robust controls. Regulators expect clear documentation. And auditors are raising the bar on data integrity. 

In response, adoption of lease accounting software is accelerating. According to recent surveys, a majority of UK mid-sized firms expect to increase automation in finance over the next 12 months, with lease accounting cited as a key area. 

Importantly, this isn’t just a concern for large multinationals. Mid-sized firms often face the biggest compliance risk, with lean teams and legacy processes. In those settings, systemisation isn’t just helpful — it’s essential. 

The bottom line 

Spreadsheets had their moment. But that moment has passed. 

Lease accounting has become too complex, too regulated, and too important to be left to legacy tools. Finance leaders now need systems that are auditable, scalable, and intelligent, that reduce business risk while freeing up capacity. 

MRI Software offers exactly that: a global platform with local expertise, built for organisations ready to move beyond spreadsheets and take control of their lease obligations. 

Register now for the Leading Voice Broadcast – Mastering Lease Accounting: Lessons from IFRS 16 & the FRS 102 Transition