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Lease Accounting Group May Withdraw Support of Standards Update

One major lease accounting stakeholder is voicing its opposition to newly prop

Changes to lease accounting standards have been in the works for some time now, but a tentative accord struck recently by the International Accounting Standards Board and the Financial Accounting Standards Board may now be facing opposition from a major stakeholder.

Leaders of the Equipment Leasing and Finance Association, which represents companies in the equipment financing sector, recently penned a letter to the two accounting boards calling the proposed standards "fraught with difficulties." The IASB and FASB settled on a dual approach that allows the cost of some leases to be calculated evenly over the course of the agreement while others reflect greater liability from interest payments earlier in the loan.

"Unfortunately, since we do not believe the boards have appropriately resolved the question of lessee cost allocation, we are seriously considering withdrawing our support for the issuance of a final standard based upon the tentative conclusions reached in the recent redeliberations," wrote William Sutton, president and CEO of the ELFA.

Among its recommendations, the ELFA said lease accounting standards should provide meaningful information to the users of financial reports, not be unduly complex, and faithfully represent the economics of these transactions.

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