Executive Summary
This article provides a post-implementation review of MFRS 16 Leases, which has been effective in Malaysia since 2019. We discuss the common challenges that companies have faced in implementing the standard and provide best practices for ongoing compliance.
Common Challenges in MFRS 16 Implementation
- Identifying all leases: One of the biggest challenges has been identifying all lease arrangements, particularly those embedded in service contracts.
- Determining the lease term: The lease term is a key input into the lease calculation, and it can be complex to determine, especially when there are renewal or termination options.
- Calculating the discount rate: The discount rate used to present value the lease payments can also be difficult to determine, particularly for private companies.
- Data management: MFRS 16 requires a significant amount of data to be collected and managed, which can be a challenge for companies with manual systems.
Best Practices for Ongoing Compliance
- Centralize your lease data: Use a centralized system to store and manage all your lease data.
- Standardize your processes: Implement standardized processes for identifying, assessing, and accounting for new leases.
- Automate your calculations: Use lease accounting software to automate the complex calculations required by MFRS 16.
- Provide training: Ensure that your finance team is adequately trained on the requirements of MFRS 16.
Related Services
Our Accounting & Financial Reporting team can help you to navigate the complexities of MFRS 16. We provide implementation support, technical advice, and training to ensure that you are compliant with the standard.
Last updated: 15 October 2025