IFRS 16 Works. So Why Is the IASB Reopening Parts of It?

A standard can work as intended and still be expensive to apply.

That is the central message from the International Accounting Standards Board’s Post-implementation Review of IFRS 16 Leases.

At its July 2026 meeting, the IASB concluded that IFRS 16 is, overall, working as intended. Stakeholder feedback confirmed that the Standard has improved the transparency and comparability of lease information, giving investors a better basis for assessing the effects of leases on a company’s financial position, performance and cash flows.

But that was not the end of the discussion.

The IASB also added a new research pipeline project, Targeted Improvements to IFRS 16 Leases, to explore whether some recurring application costs can be reduced without significantly weakening the usefulness of lease-related financial information. The IASB will decide when to start the project at a future meeting.

What the IASB actually decided

The research pipeline project will explore two areas in which stakeholders identified higher-than-expected ongoing application costs, together with one targeted clarification:

The IASB has not issued an amendment through this decision and has not published an Exposure Draft. Targeted Improvements to IFRS 16 Leases is currently in the IASB’s research pipeline, but its start date has not yet been determined. A Project Summary and Feedback Statement for the Post-implementation Review is expected in the fourth quarter of 2026.

Standard-setting status is part of the accounting analysis

Technical accounting research often combines sources with very different levels of authority. A meeting decision, staff paper, Exposure Draft and final amendment can all be relevant—but they are not interchangeable.

Why a functioning standard can remain expensive

IFRS 16 brought most leases onto lessees’ balance sheets through right-of-use assets and lease liabilities, subject to the recognition exemptions for short-term leases and leases of low-value assets. That improved visibility, but initial recognition is only one part of the process.

The ongoing work sits in the life cycle of the lease portfolio: contract changes, index-linked payments, extension and termination options, discount-rate assumptions, lease modifications, system reconciliations, journal entries, controls and disclosures.

For companies with large property, vehicle or equipment portfolios, a technically narrow requirement can become a significant operational process when it must be applied contract by contract and reporting period by reporting period.

Company filings show where the work occurs

Clarifo MCP can connect current accounting requirements with filing-level evidence from actual company reporting. Time-sensitive standard-setting developments should separately be checked against the latest official IASB project source.

One distinction matters when reading the examples below: the size of a lease liability shows financial materiality, not workload by itself. Operational complexity comes from the underlying portfolio — the number and diversity of contracts, changing terms, renewal and termination options, index-linked payments, discount-rate inputs and the frequency with which those inputs need to be reassessed.

Nokia’s 2025 financial statements illustrate the balance-sheet materiality of lease accounting in a large listed group. The company reported €920 million of right-of-use assets at year-end, compared with €758 million a year earlier. It also reported €1.0 billion of lease liabilities, comprising €797 million of long-term liabilities and €203 million of short-term liabilities. The figures show why IFRS 16 is a material finance process, but they do not by themselves indicate how much contract-level work sits behind the balances.

Telia Company provides a clearer view of the operational complexity behind those balances. Its 2025 Annual Report describes leases covering technical sites, rooftops, colocations, space on towers and data centres, network infrastructure, offices, stores, parking space, land, vehicles and IT equipment. The agreements are negotiated individually, contain a wide range of lease terms and conditions, and often include renewal options.

At year-end 2025, Telia reported SEK 17.87 billion of lease liabilities, comprising SEK 14.50 billion of non-current liabilities and SEK 3.37 billion of current liabilities. The amount makes lease accounting financially significant. The workload implication comes from the portfolio underneath it: heterogeneous assets, individually negotiated terms and renewal options create recurring work around lease data, lease-term assessments and remeasurements across reporting periods.

TRATON illustrates a different source of complexity: measurement judgment. The group reported approximately €1.3 billion of lease liabilities at year-end 2025. It measures those liabilities by discounting outstanding lease payments using the lessee’s incremental borrowing rate and updates its estimates of extension and termination options when material changes occur in the operating environment or the contract.

TRATON also disclosed €720 million of potential future cash outflows, mainly from extension options, that were not included in the measurement of lease liabilities. This shows why the recognised balance alone does not capture the full economic range of lease-related cash flows — and why option assessments can remain an important recurring accounting judgment.

Interpretation note: the examples distinguish financial materiality from operational complexity. Large recognised lease balances show why IFRS 16 matters to financial reporting, but they are not a proxy for workload. The recurring work arises from the contract population and the judgments, data changes and remeasurements required over time. The company disclosures do not quantify those application costs; the IASB’s conclusion on higher-than-expected ongoing costs is based on stakeholder feedback gathered through the Post-implementation Review.

How Clarifo MCP supports finance teams

The value of Clarifo MCP is not simply that it can summarise IFRS 16. It can help finance teams preserve the connection between the requirement, the standard-setting status and real implementation evidence while they work inside an AI-enabled research workflow.

A more useful finance-ready output

For the IFRS 16 review, a useful internal briefing should show the full chain:

The broader lesson from IFRS 16

The IASB’s conclusion is not that IFRS 16 failed. The review shows that standard-setting does not end when a requirement becomes effective.

A Standard can improve reporting quality while creating processes that are more complex or costly than expected. The IASB can confirm the usefulness of the accounting model while still identifying targeted areas for improvement.

Finance teams should not anticipate an amendment that does not yet exist. They should monitor the project, understand which parts of the current process may eventually change and maintain a clear record of the requirements that continue to apply today.