The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently released proposed changes for the financial reporting of leases. The changes are to generate improved quality and comparability of financial reporting by providing greater transparency of leverage, operational assets and leasing transaction risks.
Developed to improve the leasing activity rules under the International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP), the proposed changes stem from criticism that the existing standards do not meet the needs of financial statement users because they do not always provide a faithful representation of leasing transactions. The new standards, if adopted, could significantly increase the reported debt of companies.
The boards are accepting feedback on the proposed changes until September 13, 2013. After the feedback is received, the boards will decide next steps, including setting an effective date for the new lease accounting rules.
To learn more about the proposed changes, read the Weaver e-newsletter article Lease Accounting: Proposal Would Mean Major Changes. If you have questions about how the proposed new standards could affect your business, consult a Weaver advisor.