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August 18, 2011updated 12 Apr 2017 4:12pm

IASB sure lease revisions will allay concerns

A senior figure at the International Accounting Standards Board (IASB) has said it is confident that a revised draft of its delayed lease accounting rule has allayed the main concerns of the leasing industry The London-based standard setter said it has tried to make its lease accounting rule, which will put leases on corporate balance sheets, simpler and less onerous and costly to comply with, in response to concerns from businesses

By Nick Huber

A senior figure at the International Accounting Standards Board (IASB) has said it is confident that a revised draft of its delayed lease accounting rule has allayed the main concerns of the leasing industry.

The IASB hopes to publish the final version sometime next year.

The London-based standard setter said it has tried to make its lease accounting rule, which will put leases on corporate balance sheets, simpler and less onerous and costly to comply with, in response to concerns from businesses.

The accounting rule is likely to come into force after 2014 or 2015, although the IASB board hasn’t made a decision on the date.

However, the IASB official, who asked to remain anonymous, has said that it may make more changes to its latest draft which is due to be published next month, depending on the response from business.

When the IASB published its first 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.

“We are publishing another exposure draft, which includes all the changes to the consultation so that people can see the changes in context and if we have left anything major out,” the IASB official told Leasing Life earlier this week. “It’s possible to make further changes.”

The final version of the accounting rule, which will put an estimated $1 trillion (€707bn) of leased assets on corporate balance sheets, was originally due to be published in June.

In April, however, the IASB and its US counterpart from the Financial Accounting Standards Board (FASB) said that it would push the deadline back to the end of this year to give them more time to get the standard right.

Although leasing industry bodies welcomed the decision to delay publication of the standard there has been some frustration in the industry about being unable to plan for the accounting rule because it hasn’t been finished.

The IASB official defended its decision to delay publishing the final rule. “If people are frustrated because [the lease accounting rule] hasn’t been completed I think they would have been more frustrated if we pulled the trigger too soon. If we went too fast there would be more frustration.”

The latest draft for lease accounting includes some significant changes, according to the IASB. Key changes 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 IASB said in July.

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