The Financial Accounting Standards Board and the International Accounting Standards Board are giving accountants, businesses and various other constituents one more chance (at least) to comment on their latest leasing proposals.
They announced Thursday that they intend to “re-expose” the most recent version of their revised proposals for a common leasing standard. That will give all the interested parties another opportunity to send the boards comments on the various changes the boards have made to the standards since they published their original exposure draft last August. The biggest change is to report leasing obligations on the balance sheet.
“During our discussions of the extensive comments we received on the exposure draft, the boards have reaffirmed the major change to lease accounting, which is to report lease obligations and the related right-to-use on the balance sheet,” said FASB chair Leslie F. Seidman in a statement.
She noted that the two boards have made many changes since last August to address the comments made by various stakeholders. They are still chewing over the standards, but they want to give people an opportunity to comment on the revised set of proposals.
Her new counterpart at the IASB, Hans Hoogervorst, echoed her desire to re-expose the latest draft. “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,” he said in a statement.
Hoogervorst, a former Dutch finance minister, took over as chairman of the IASB earlier this month following the retirement of long-time chairman Sir David Tweedie at the end of June. Tweedie often used to joke that it had long been his life’s ambition to travel on an airplane that was on a company’s balance sheet. The airline industry habitually leases its aircraft, and airline companies are likely to find themselves making substantial adjustments to their numbers under the new standards that are taking shape. Businesses in other industries, including real estate, commercial property and equipment leasing, also have a lot at stake.
FASB and the IASB have made leasing one of the three priority projects they have been working on this year, the others being revenue recognition and financial instruments. They had originally been given a goal of completing their major convergence projects for uniting U.S. GAAP with International Financial Reporting Standards by June 30 by the G-20 group of world financial leaders.
That timeline has slipped repeatedly amid demands for changes by various stakeholders, plus the Securities and Exchange Commission has not yet given the official go-ahead for incorporating IFRS into the U.S. financial reporting system. In the meantime, FASB and the IASB have been re-exposing the latest proposals for changes in the priority standards. Last month, it was revenue recognition, and now leasing is on the way (see FASB and IASB Re-open Revenue Recognition Standards).
Seidman also recently indicated that would happen with the financial instruments standards too (see FASB and IASB Re-deliberate Standards). In April, they said the three standards were targeted for completion in the second half of this year, but that timeline could slip again the more standards are re-open for suggestions and further tweaks.
Even after the standards are finalized, the two boards plan to go back later after they’ve been implemented to see how they’re working out for companies. The standards, as always, are going to be a moving target for accountants for a long time to come.