Lease accounting and reporting just got more complicated for UK SMEs. However, it can be done with ease and precision, thanks to a mature solution used for IFRS 16 for over seven years. This solution takes lease management to a whole new level.
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With the revised FRS 102 Section 20 in effect from 1 January 2026, UK GAAP is entering a new era of lease accounting. The familiar divide between operating and finance leases has disappeared for most contracts.
As a result, cars, offices, equipment, and other leased assets are moving onto the balance sheet. This turns what used to be a simple operating cost into a structured set of assets, liabilities, depreciation schedules, and interest calculations.
For many UK CFOs, the first instinct is to reach for Excel. It’s familiar. It’s flexible. It has served the finance function well for decades.
But under modern lease accounting rules, relying on spreadsheets is far more likely to create stress than compliance. Also, spreadsheets are more likely to generate risk than control.
Summary
- Section 20 has become more complex than a static spreadsheet can reliably handle. Post-2026, almost all leases require capitalisation, monthly calculations, and continuous updates.
- Manual spreadsheets introduce hidden risks. Formula errors, broken links, inherited models, and version-control problems are leading causes of audit delays and restatements.
- Automation is no longer optional. Bulk updates, such as CPI adjustments or remeasurements, take seconds in software and hours in Excel.
- The solution already exists. House of Control Lease Accounting Software for FRS 102 is a mature, proven platform developed since 2019 and used by several hundred Scandinavian and European listed companies for IFRS 16 reporting.
- This isn’t about replacing Excel. It’s about gaining control. CFOs who adopt software reduce risk, improve accuracy, and free up time for strategic work.
Read more: 2026 profit changes under FRS 102 Section 20: Explaining the new UK GAAP lease P&L to the board.
The new FRS 102 reality of Section 20
The revised FRS 102 Section 20 brings UK GAAP very close to IFRS 16. Almost every lease now requires:
- Recognition of a right-of-use asset
- Calculation of a lease liability
- Discounting of future payments
- Depreciation and interest expense
- Ongoing remeasurement when terms change
- Robust disclosure notes
The principles are straightforward. The practical workload is not.
You’re no longer simply tracking rental payments; you’re calculating the Net Present Value of future cash flows, applying discount rates, handling modifications, monitoring indexation, and producing audit-ready reconciliations.
And when you multiply these requirements across dozens or hundreds of leases, the workload quickly outgrows anything resembling a spreadsheet-friendly process. Sometimes reporting must be carried out across different entities, different currencies, and contract structures.
Why spreadsheets are not fit for the job
If calculating the NPV of a single lease were the only task, Excel might survive the transition. But lease accounting is dynamic, not static. Spreadsheets are, in our opinion, not fit for purpose. Here is where the model breaks. Let’s take a look at five major challenges.
1. The “inheritance problem” and human error
Nearly every finance leader who comes to us with a spreadsheet model shares the same story: “We inherited this file from someone else.”
These files often contain:
- Hard-coded numbers
- Undocumented assumptions
- Inconsistent formulas
- Outdated macros
- Broken or circular references
It takes significant effort just to understand the logic, let alone validate it.
And even a small human error, such as referencing the wrong cell, can cascade across the entire model. Auditors know this. That’s why they start by looking for formula inconsistencies. When they find them, confidence in the numbers drops immediately. Plus, audit costs go up.
2. The nightmare of simultaneous updates
Imagine a retail chain with 50 outlets where the lessor adjusts prices based on CPI.
In Excel, you must:
- Update 50 rows or tabs
- Ensure the change applies from the correct date
- Recalculate the lease liability
- Adjust the right-of-use asset
- Update depreciation
- Update interest expense
- And document everything
It is slow, manual, and highly prone to mistakes.
In a modern lease accounting platform, CPI updates are handled in bulk. The system recalculates the liability, adjusts the asset, and posts the accounting impact automatically. Every step follows the standard with no room for error.
Read more: Revised FRS 102 vs the pre-2026 FRS 102 and older UK GAAP explained.
3. Version control and data integrity
Distributing spreadsheets around the organisation is one of the biggest sources of risk:
Who has the latest version? Did someone overwrite a formula? Did someone paste values instead of formulas? Did the property manager update the right tab?
The finance team becomes a detective agency trying to consolidate inputs across departments. The chance of getting a correct, complete answer on time approaches zero.
Excel simply cannot offer secure, consistent collaboration across multiple stakeholders.
4. Scaling beyond 15–20 leases becomes a structural problem
Auditors frequently confirm the same rule of thumb: Excel may work for up to 15 leases – beyond that, the model becomes unstable.
Once you operate across several legal entities, currencies, or asset classes, the manual workload grows exponentially. Modern compliance demands automation. Spreadsheets demand labour.
5. Long, expensive audits
Auditors are required to:
- Recreate your calculations
- Validate formulas
- Review every tab
- Trace contract input to accounting output
- Request documentation on every deviation
This dramatically increases the time and cost of the audit.
With a dedicated lease accounting system, you simply grant auditors read-only access. They can drill down into calculations, view uploaded documentation, and export reconciliations instantly.
What CFOs learned during IFRS 16, and why it matters for Section 20
The good news for UK CFOs is this: The challenges of the new FRS 102 Section 20 are not new. They’ve already been solved elsewhere.
When IFRS 16 went live in 2019, hundreds of listed companies across the Nordics and Europe faced the same leap in complexity. House of Control developed a lease accounting solution specifically for that transition. The software has been continuously refined, and it is based on real-world use cases, audit requirements, and customer feedback.
The result is a mature, proven, robust platform, not a version-1.0 solution. As part of the Visma family, House of Control combines deep lease accounting expertise with the scale, security, and long-term stability of one of Europe’s most respected software groups.
Read more: FRS 102 lease changes 2026 compared with IFRS 16.
House of Control Lease Accounting Software for FRS 102
House of Control Lease Accounting Software for FRS 102 brings automation, collaboration, and auditability into a single, structured workflow. The most important features are:
- One central repository for all leases: OCR-assisted scanning extracts metadata automatically. Every contract is stored securely with all versions and supporting documents. No missing files. No lost emails. No confusion.
- Accurate calculations, no debate required: Discounting, amortisation, depreciation, indexation, currency effects, and remeasurements are handled automatically in line with the standard.
- Smooth collaboration across departments: Local teams input data. Finance retains control. No more sending, merging, or correcting spreadsheets.
- Powerful reporting: Notes, journals, movement schedules, and group reports are produced at the click of a button.
- Audit-ready by design: Auditors get transparent, drill-down access. This reduces cost, time, and pressure.
- Built for growth: Whether you manage 20 leases or 2,000, the workflow remains exactly the same.
More information about this solution will be shared early 2026.
Six steps to a successful FRS 102 Section 20 transition
Since 2019, most of our customers follow a six-step approach when complying with the IFRS 16 lease accounting requirements for the first time:
- Centralise all contracts: You can’t assess a lease if you don’t know it exists.
- Add the basic data: Start/end dates, counterparty, location. Ideally, this is captured by local teams.
- Apply discount rates in bulk: Get compliant quickly and consistently.
- Upload documentation: Store signed contracts and key papers in one place.
- Extract the required reports: Generate disclosures, journals, and reconciliations instantly.
- Maintain continuously: Lease accounting becomes easier when updates happen throughout the year, not at year-end.
Conclusion
The revised FRS 102 Section 20 represents a major shift. However, it doesn’t need to become a burden. Excel may feel like the comfortable option, but it rarely delivers the accuracy, auditability, and control required under the new standard.
By adopting House of Control Lease Accounting Software for FRS 102, you shift from reactive spreadsheet firefighting to a proactive, reliable, and structured approach.
You reduce risk. You save time. You build trust – with auditors, with your board, and with your finance team. We believe this is not just a compliance upgrade. It is a strategic upgrade. At least that is what our IFRS 16 customers have discovered.
Key takeaways
- Software provides a secure, traceable audit trail that Excel cannot match.
- Automation eliminates manual recalculation and bulk modifications.
- Risk drops dramatically when you remove the “inheritance problem”.
- House of Control’s solution is mature, proven, and backed by Visma.
- Your next step: centralise your contracts and assess the size of your FRS 102 exposure.
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