The International Accounting Standards Board
(IASB) and the Financial Accounting Standards Board (FASB) have
announced a re-exposure of the lease accounting proposals later
this year.
The IASB and its US equivalent released an
exposure draft in August 2010 and have
been deliberating the comments from interested parties for the last
six months.
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The proposals, which set out a model for
capitalising all lease and rental contracts, were criticised in
around 800 comment letters for being unnecessarily complex and
failing to be conceptually consistent.
The exposure draft of revisions to the
proposal, scheduled for early in the fourth quarter of 2011, is
designed to give interested parties an opportunity to comment on
amendments.
The two boards have not completed
deliberations on the changes to standard and said the major change,
which is to report lease obligations and the related right-to-use
on the lessee balance sheet, will go ahead.
However, the boards’ chairmen said decisions
taken to date were sufficiently different from those published in
the original exposure draft to warrant re-exposure of the revised
proposals.
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By GlobalDataThe major changes will include a clarified
definition of lease and rental contracts and “significant” change
to the accounting system for lessors, moving from a dual to a
single accounting model.
The boards intend to complete their deliberations during
September with a view to publishing the revised exposure draft
shortly afterwards.
Hans Hoogervorst, chairman of the IASB said: “Although we have
yet to conclude our deliberations on this project, the direction of
travel indicates that there are aspects of our revised proposals
that would benefit from additional input from interested
parties.”
Mark Venus, project director with BNP Paribas
and chairman of Leaseurope’s accounting committee, said the
decision to re-expose is the right one and said it would have been
premature to issue a final standard without further feedback.
He said: “We’ve seen many positive changes
during the course of the Boards’ re-deliberations on this
project.
“These include moves to simplify some of the
most complex and burdensome aspects of the proposed accounting for
lessees.”
Venus added the re-exposure would raise the
profile of important questions the re-deliberation process had
raised yet not shed any real light on such as the lessor accounting
model.
He said: “These are obviously among the key
issues in a leasing standard and must be addressed as a matter of
priority.”
Tanguy van de Werve, Leaseurope’s director
general, said the trade body, along with the European Financial
Reporting Advisory Group (EFRAG), had called for the Boards to
re-expose their thinking on the standard because of its pervasive
nature. EFRAG was set up in 2001 to assist the European Commission
in the endorsement of IFRS.
He said: “When it comes to standard setting,
the devil is in the details and constituents need to have the
opportunity to analyse comprehensive proposals to ensure they are
being consistently understood and will not have any unintended
consequences on European businesses and investment levels.
“We have high expectations of this re-exposure
process and look forward to working closely with the Boards and our
European interlocutors on this over the coming months.”
The length of the comment period for the re-exposure has yet to
be confirmed and the final publication of the proposal is scheduled
for 2012.
Further details will be available next week from the leases
project sections of the
IASB and FASB websites.
