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Lease Accounting and the Impact of the Rules Changing

Proposed changes to Lease accounting rules could have a significant impact on resourcing in the financial sector.

Published in May by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), the proposals include a requirement that all leases exceeding 12 months be included on company balance sheets.

 

Lease Accounting Deals are Likely to Change 

This could lead to a change in the way that lease deals are structured in the future as companies alter the format of their leases in order to keep them off the books. There are a number of ways that this could happen, such as by reducing lease lengths or by using service contracts instead of leases.
 

Lease Accounting Proposals Finalise in September

Whilst consultation on the proposals ends in September, it is unclear what the final changes will be or the final time scales for implementation. Amendments to the lease accounting rules have been on the cards for some time. The project itself started back in August 2010, although its original proposals were rejected. Whilst refined and less complex proposals have been issued, there is concern in a number of quarters about their practicality and administration.

 

Proposed changes to Lease accounting rules could have a significant impact on resourcing in the financial sector.

Published in May by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), the proposals include a requirement that all leases exceeding 12 months be included on company balance sheets.

 

Lease Accounting Deals are Likely to Change 

This could lead to a change in the way that lease deals are structured in the future as companies alter the format of their leases in order to keep them off the books. There are a number of ways that this could happen, such as by reducing lease lengths or by using service contracts instead of leases.

 

Lease Accounting Proposals Finalise in September

Whilst consultation on the proposals ends in September, it is unclear what the final changes will be or the final time scales for implementation. Amendments to the lease accounting rules have been on the cards for some time. The project itself started back in August 2010, although its original proposals were rejected. Whilst refined and less complex proposals have been issued, there is concern in a number of quarters about their practicality and administration.

 

Centralised Approach to Processes

If the changes do come into effect companies are likely to need a more centralised approach to systems and processes for dealing with leases and appropriate software to support the new requirements. 

As a result, the impact of the lease accounting changes are likely to be felt in a number of resourcing areas, including finance, property and IT systems.

Written by Marc Dewdney

 

 
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