BVRLA highlights key lease accounting issues

The BVRLA has called on the International Accounting Standards Board (IASB) to re-examine its plans to bring all leased assets and liabilities onto the balance sheet.

"Most people accept the need to make major leased assets and liabilities more transparent," said BVRLA chief executive John Lewis. "But whether you are talking to leasing companies, their customers or accounting firms, there is almost total consensus that the plans being put forward are over-complicated and will fail to achieve their objective."

In its response to the IASB consultation on the proposals, which closed last week, the BVRLA highlights issues it believes the IASB needs to address: Short-term leases. The BVRLA believes that low value transactions lasting less than 12 months should be treated as service contracts and therefore excluded from the proposals.

Transition period. The association also believes that affected firms should be given a minimum of four years to make the necessary system and process changes required to meet the new accounting requirements.

The BVRLA is confident that the proposed standards will not erode the key commercial benefits of leasing, but it is keen to ensure that they do not put an excessive accounting burden on businesses. The IASB is now expected to review the consultation responses before publishing a final standard in the first half of 2011.

The BVRLA's response can be read by clicking here...

To visit the BVRLA website click here...

source: BVRLA