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Development of a Disclosure Index for Lease Accounting Policies: Evidence from Romanian Banks

Leasing is an important financing solution used by banks to carry out their daily operations. From a lessee perspective, IFRS 16 changed completely the accounting landscape for lease contracts. A right of use assets and a corresponding lease liability must be recognized in the lessees’ balance sheets. Additionally, extensive disclosures are required. This paper aims to study the extent to which Romanian banks comply with IFRS 16 disclosure requirements. The population includes 23 Romanian banks. To carry out this research, we employed the content analysis technique and reviewed the IFRS 16 disclosures from the 2020 IFRS financial statements. To measure compliance, we developed a dichotomous and unweighted disclosure checklist, which includes 34 items grouped into six categories. The results of our study revealed that, in the first year following the IFRS 16 transition, Romanian banks recorded an average 62% level of compliance with IFRS 16 disclosure requirements. There is a lot of room for improvement in the following years, especially for top ten ranked banks.