The UK’s Finance & Leasing Association (FLA) and Forum of
Private Business (FPB) have responded to proposed changes to lease
accounting rules by the International Accountancy Standards Board
(IASB), warning that hundreds of thousands of UK SMEs could be
aversely affected if the changes go ahead.
Under the new proposals, some 400,000 companies which use
leasing and hire purchase, and which are required by law to prepare
financial accounts, would need to report leased equipment on their
own balance sheets.
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In a statement, the FLA and FPB argued that “it is not sensible
to apply the same procedures to photocopiers in use in a small
manufacturing company and to an aircraft used by one of the world’s
leading airlines”.
“Therefore, an optional, simplified procedure should be
available for all but the largest leases.” the statement
continued.
Stephen Sklaroff, director general of the FLA, added:
“We are not against leased equipment appearing on balance
sheets. But the standard-setters need to follow the European
Commission’s advice to ‘Think Small First’ and consider whether the
compliance regime is too onerous for small businesses.
“Surely, we should differentiate between large corporates with
millions of pounds of leased equipment and small businesses that
rent a fax machine and a photocopier? Britain’s businesses will be
the catalyst to economic recovery, so we need to give them all the
help we can.”
Fred Crawley
