The State Bank of Pakistan (SBP) has granted six months extension for implementation of International Financial Reporting Standard on Leases. According to SBP, implementation of International Financial Reporting Standard on Leases (IFRS16) on the banking industry was with effect from January 1, 2019.
However, in this regard, there have been representations from the financial institutions about the difficulties being faced by them in the implementation of the subject standard.
Therefore, it has been decided to extend the implementation date of IFRS-16 for banks/DFIs/MFBs in Pakistan by six months from January 1, 2019 to June 30, 2019.
SBP has advised that the banks/DFIs/MFBs to review their internal systems and procedures to prepare themselves for implementation of this standard within the prescribed timeline.
However, the banks/DFIs/MFBs, which have already adopted IFRS16, may prepare their financial statements in accordance with IFRS 16. It may be mentioned here that IFRS 16 defines a lease as "A contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration".
International Financial Reporting Standard (IFRS) 16 Leases was issued in January 2016 and, in comparison to its predecessor International Accounting Standard (IAS) makes significant changes to the way in which leasing transactions are reported in the financial statements of lessees.
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