A drive to resolve technical issues in a
controversial new accounting standard for leases has continued
following meetings between the standard setters’ boards.
The new rules are expected to be published in
June, but there are concerns that it is too complex and will
increase compliance costs for a wide range of businesses. Critics
say it will put more than an estimated $1 trillion (€707billion) of
leased assets on corporate balance sheets.
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Officials from the International Accounting
Standards Board (IASB) have been meeting US counterparts from the
Financial Accounting Standards Board (FASB) in London this week to
discuss the lease accounting standard. The meetings between the
boards are due to conclude on 14 April.
Earlier this month, nine international leasing
and business organisations called for the lease accounting standard
to be delayed until the end of this year in order to allow time for
business concerns to be addressed.
Speaking to Leasing Life, a spokesman
for the IFRS Foundation, the parent entity of the IASB, said the
body would be in a better position to discuss the timing of the
lease accounting standard after the meetings with the FASB have
concluded.
Leaseurope, which represents leasing and
automotive rental industries, said it expected the standard
setters’ boards to take decisions on “make or break” issues, such
as clarifying the definition of a lease and whether there are two
types of leases.
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By GlobalData“This could lead to a very different model
compared to the one previously exposed, which is why Leaseurope,
together with associations across the globe, has called for the
proposals to be re-exposed,” Leaseurope said.
When the IASB published an exposure draft of
the lease accounting standard in August 2010 it attracted nearly
800 comments – many of them critical. Concerns included how to
differentiate leases from services; complexities in considering
contingent rents and estimating lease terms; and the impact of
lease accounting on the income statement.
