Spreadsheets can cope with a handful of simple leases. The trouble starts later — when a lease is modified, a rent review lands, CPI-linked payments shift, a new entity joins the group, or month-end demands a clean current and non-current split with matching journals. At that point, the question is no longer whether a tool claims “AASB 16 support”, but whether it actually handles the workflows your finance team runs every reporting period. Knowing how to choose AASB 16 lease accounting software means looking past the marketing line and testing each system against the recognition, measurement, journal and reporting tasks you already do by hand.
This guide explains how to evaluate lease accounting software for Australia, which capabilities matter most in practice, and which questions Australian finance teams should ask before committing to a platform.
Start with the accounting workflows you actually need
The most useful thing you can do before watching a single demo is write down what your organisation actually manages. Vendor demonstrations are built to look impressive; a requirements list built around your own portfolio keeps the conversation honest and comparable across suppliers.
Work through questions like these before you shortlist anything:
- How many leases are you managing now, and how quickly is that number growing?
- Are they property, vehicles, equipment, or a mixed portfolio with different behaviours?
- Do you account for multiple entities, and do they need to be reported separately and consolidated?
- Are payment schedules regular, or are there irregular, stepped or seasonal payments?
- How often do leases actually change through the year — extensions, reductions, rent reviews?
- Which accounting system needs to receive the journals?
- Are you also managing finance arrangements such as hire purchase alongside leases?
- Who reviews the schedules and disclosures, and what sign-off do they need?
The number of leases alone does not decide the product for you — a small portfolio of complex, frequently modified property leases can be harder to run than a large book of stable, identical equipment leases. The point is to define the operational shape of your portfolio first, then judge each system against it.
Confirm that the software supports the full AASB 16 lifecycle
AASB 16 Leases is the Australian equivalent of IFRS 16, and it requires a lessee to recognise a right-of-use asset and lease liability — the ROU asset and its corresponding liability — for most leasing arrangements, subject to scope, recognition exemptions and materiality. That single sentence hides a lot of ongoing work, so the real test is whether a system supports the whole lifecycle of a lease rather than just its opening position.
Australian Government entities can also refer to the Department of Finance’s Accounting for Leases guidance (RMG 110), which applies to Commonwealth entities and covers matters such as discount rates and the incremental borrowing rate.
Initial recognition
Check how the system handles the setup of a new lease:
- lease commencement date;
- the payment schedule, including fixed or stepped payments and index- or rate-linked payments where applicable;
- the discount rate or incremental borrowing rate applied;
- calculation of the initial lease liability;
- calculation of the ROU asset;
- treatment of initial direct costs, lease incentives and prepayments where relevant.
Ongoing measurement
A correct opening balance is only useful if the system keeps it right over time. Confirm it can produce:
- interest on the lease liability;
- depreciation of the ROU asset over the applicable period;
- allocation of each payment between principal and interest;
- movement between current and non-current liability balances;
- periodic schedules for review at each reporting date.
Modifications and remeasurement
This is an area that should be tested carefully during evaluation. Ask specifically how the system deals with:
- lease extensions;
- reductions in scope;
- changes to payment amounts;
- CPI and index-linked adjustments;
- discount-rate changes where applicable;
- partial and full terminations.
A system that builds a tidy opening schedule but cannot process later changes without rebuilding it manually is not covering the full operational lifecycle. Modifications and remeasurements are where the time and the risk really sit, so make them a central part of your evaluation rather than an afterthought.
Look beyond calculations to journals and month-end workflows
A mathematically correct schedule is only part of the job. The finance team still has to get those numbers into the ledger and through month-end without a wrestling match. When you assess a platform, look at how it supports:
- journal generation for each period;
- current and non-current liability splits;
- interest and liability movements;
- review of journals before they are posted;
- mapping to your general ledger accounts;
- classifications, dimensions or tracking categories;
- support for reconciliation to the ledger;
- reopening periods and making corrections;
- a clear audit trail of what changed and when.
Be cautious with any tool that promises to make you “audit-ready” as an absolute. What good software realistically does is support audit preparation and review by keeping schedules, journals and change history organised and traceable. That is a genuine benefit — just make sure it is described honestly rather than as a guarantee.
Check reporting and disclosure support
Reporting is where lease accounting either saves you time or quietly creates more. Confirm the system can produce the outputs your reporting cycle depends on:
- lease liability movements;
- ROU asset movements;
- interest and payments;
- lease expiry schedules;
- current and non-current balances;
- both historical and forward-looking reports;
- filters by entity and classification;
- exports to PDF and CSV;
- outputs that support your AASB 16 disclosures.
Software supports the preparation of these disclosures — it does not, on its own, guarantee that your financial statements are correct. The reports still need review, and professional judgement still applies. What you are looking for is a system that gives you structured, traceable source material for review, not one that claims to remove the review step altogether.
Evaluate integrations carefully
“Integration” is one of the most overloaded words in software procurement, and it can mean very different things from one vendor to the next. Before you take a claim at face value, work out which of the following it actually refers to:
- importing data into the system;
- exporting journals as a file;
- posting journals directly into the accounting system;
- mapping to the correct accounts;
- synchronising classifications or tracking categories;
- creating assets;
- two-way synchronisation.
Then put concrete questions to the supplier:
- Can journals be reviewed before they are posted?
- Which data moves automatically, and which is manual?
- Which workflows differ depending on the accounting system?
- Are dimensions or tracking categories supported?
- What happens if a journal fails to post?
- Can data still be exported if direct posting is not available for your system?
Integrations with platforms such as Xero, QuickBooks Online, Sage Intacct and Microsoft Dynamics 365 are worth having, but do not assume they all behave identically. The depth of the connection — direct posting versus a simple export — often matters more than the length of the supported-integrations list.
Decide whether leases and fixed assets should share one system
For many Australian finance teams, leases are not the only register they maintain. ROU assets and owned fixed assets follow different accounting mechanics, but the same team frequently has to do the same surrounding work for both. It is worth deciding early whether these belong in one platform or two.
In practice, finance teams often need to:
- maintain both a lease register and a fixed asset register;
- reconcile both back to the general ledger;
- manage the underlying asset details;
- post journals for both;
- produce movement reporting across both;
- do all of this across multiple entities.
Running these in separate, disconnected tools tends to create duplicated records and manual handoffs. A single platform that manages leases and fixed assets together can reduce that duplication and keep the workflows joined up. This is genuinely a point of difference between products, so it is worth weighing against how your team is structured. For a fuller treatment of where the two disciplines meet, see how lease accounting and fixed asset accounting overlap.
Consider finance arrangements separately
It is tempting to lump everything that involves financed payments into one bucket, but AASB 16 lease accounting is not the same workflow as hire purchase, chattel mortgages or asset finance loans. Treating them as interchangeable is a common way to end up with the wrong accounting.
When you assess a system, ask it to keep these distinct:
- Can it manage ROU leases under AASB 16?
- Can it separately manage financed assets?
- Can those financed assets stay connected to the fixed asset register?
- Can it maintain principal, interest and payment schedules for the finance arrangement?
Hire purchase, chattel mortgages and asset finance loans should not automatically be presented as AASB 16 lease workflows. Their accounting treatment depends on the terms of the arrangement and the applicable standards, so the software should allow them to be managed separately from right-of-use leases where required.
Test migration, controls and day-to-day usability
Migration should not become the whole story of your evaluation, but it is a real cost and a real risk, so include it as a criterion. The same goes for the everyday controls and usability your team will live with. Check for:
- import from spreadsheets;
- support for both regular and custom schedules;
- clear validation of errors on import;
- bulk updates;
- attachments against leases;
- user permissions and roles;
- change history;
- implementation support;
- a trial, sandbox or structured product test where available.
Wherever possible, test a platform on your own representative leases rather than the tidy examples in a vendor demo. A sample of your genuinely awkward leases — the modified property lease, the CPI-linked one, the mid-term termination — will tell you far more than a polished demonstration ever will.
Questions to ask during a lease accounting software demo
Take a consistent set of questions into every demo so you can compare suppliers on the same basis:
- How does the system calculate the initial ROU asset and lease liability?
- How are CPI-linked changes processed?
- Can it handle partial terminations and modifications?
- How are current and non-current balances tracked?
- What journals are generated?
- Can journals be reviewed before posting?
- Which functions are available for our specific accounting integration?
- Can multiple entities be managed in one account?
- Can our existing schedules be imported?
- What reporting supports AASB 16 disclosures?
- What change history and audit trail does the system retain?
- Which capabilities depend on the selected plan?
The answers will separate systems that genuinely run the full AASB 16 lifecycle from those that handle the easy parts and quietly leave the rest to you.
How AssetAccountant supports Australian lease accounting workflows
With the evaluation framework in place, it is easier to see where a given platform fits. AssetAccountant provides lease accounting software for Australia that brings AASB 16 lease workflows, right-of-use assets and fixed asset management together in one system.
Against the criteria above, AssetAccountant is designed to support:
- recognition and measurement of AASB 16 ROU assets and lease liabilities;
- payment schedules and the applicable interest rates;
- modifications and remeasurement over the life of a lease;
- CPI- and index-linked remeasurement once the updated index or rate is known;
- journal generation for posting to your ledger;
- reporting to support AASB 16 disclosures;
- leases and fixed assets managed in the same system;
- supported accounting integrations, including Xero, QuickBooks Online, Sage Intacct and Microsoft Dynamics 365, with workflows varying by integration;
- multi-entity and accounting-firm workflows;
- separate handling of asset-finance arrangements.
As with any platform, these capabilities support your accounting work rather than replace professional judgement, and the right way to confirm they fit is to test them against your own leases.
Final checklist
| Area | What to verify |
|---|---|
| AASB 16 lifecycle | Initial recognition, ongoing measurement, modifications and termination |
| Calculations | ROU asset, liability, interest and payment schedules |
| Journals | Mapping, review, posting and classifications |
| Reporting | Movements, disclosures and exports |
| Integrations | The exact workflows available for your accounting system |
| Controls | Permissions, attachments and audit history |
| Scale | Entities, users and lease volume |
| Migration | Import, validation and implementation support |
| Finance arrangements | Separate handling where required |
| Trial | Test with representative, real-world leases |
Conclusion
Choosing AASB 16 lease accounting software is less about finding the tool with the longest feature list and more about matching a system to the workflows your finance team runs every reporting period. Confirm it covers the full lifecycle, generates journals you can review before posting, supports your disclosures, and integrates with your accounting system in the way you actually need — not just in principle. Keep finance arrangements distinct from AASB 16 leases, decide whether leases and fixed assets belong in one platform, and always test a shortlist on your own representative lease scenarios rather than a vendor’s tidy examples. The right choice is the one that still holds up when a real lease is modified halfway through the year.
Explore AssetAccountant’s lease accounting software for Australia, or start a 30-day free trial to test representative lease schedules and reporting workflows.
This article provides general information only. Organisations should assess AASB 16 requirements against their own contracts, accounting policies and professional advice.
