Leaseurope has warned national accounting regulators against including smaller firms in local rules modelled on IFRS 16.
The warning comes a day after the European Financial Reporting Advisory Group (EFRAG), part of the EU, formally adopted IFRS 16, the new international accounting standard which is due to supersede IAS 17 in 2019.
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Leaseurope reckoned that, under the new standard, only 1% of European firms will be required to adopt new practices, with the most impact coming from leases on properties, not vehicles or equipment.
However, it added that amending national accounting rules to reflect IFRS 16, as it often happens when new international standards are introduced, would place “too great an administrative burden on Europe’s small and medium-sized companies without any corresponding benefit to users of their accounts.”
Leon Dhaene, Leaseurope’s director general, said: “This endorsement decision is effective only for large companies that are likely to have accounting departments that are used to coping with changes to accounting rules.
“It’s essential now that national standard setters across Europe avoid any new accounting regulatory burdens on all other European companies that just want to keep investing and growing.”
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By GlobalDataIn an effort to simplify the transition to the new standards, Leaseurope will provide partner national associations with the Leaseurope IFRS 16 Specification, a standard Europe-wide format through which lessors can provide customers with a summary information relating to a deal.
Firms would subsequently be facilitated when reporting leases from different European countries in their global financial statement.
Under IFRS 16, listed companies that follow international accounting standards will be required to recognise assets and liabilities on all leases.
The only exceptions are short-term leases (duration under 12 months and no purchase option) and leases on “low-value assets”, which at the time of consultations in 2015 were described as assets worth $5,000 (£3,800) or less.
