More than half of businesses worldwide are
unaware of a controversial new accounting rule that will put
billions of dollars of leased assets on corporate balance
sheets.

Fifty four per cent of international
businesses questioned by accounting and consultancy firm Grant
Thornton had not heard of plans for the new
lease accounting standard
, which is one of the biggest changes
to global accounting for a decade. The rule will affect all
but short-term leases, and require organsiations to make
extensive changes to financial data and business
procedures. 

Lease accounting  which is being
developed by the
International Accounting Standards Board
and its US
counterpart the Financial Accounting Standards Board
(FASB), has been widely criticised by businesses for being

too complicated and expensive to comply with
.

Publication of the final rule has been delayed to give more
time to address business concerns. The IASB hopes to publish the
final version sometime next year. The rule is likely to come
into force after 2014 or 2015, although the IASB board hasn’t made
a decision on the date.

The survey of 2,800 international businesses found that, of
those who were aware of the accounting changes, 33% thought the
change would increase cost and complexity but only 15% thought it
would increase transparency.  

Twelve per cent indicated that they would
alter the way they structure leases in the future.  

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Only 44.1% of UK businesses surveyed said
they knew about the proposed change to lease accounting . Of those
that were aware, only 46% were supportive of the changes.

Within the transportation sector, one of the
industries which will be most heavily affected by lease
accounting, 53% of businesses were not aware of the potential lease
changes.  

Tarun Mistry, head of leasing and consumer
finance at Grant Thornton, said: “Our survey findings should give
the [accounting stanard’] boards pause for thought as businesses
are seeing costs and complexity in the proposals but are
questioning whether there is any improvement in transparency.”
 

Awareness of the lease accounting rule was greatest in the US
(69%), Mexico (68%) and Chile (63%). It was lowest in mainland
China (5%), Denmark (8%) and Turkey (14%).