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FASB will re-expose lease accounting draft, but looks to still issue by year end? July 22, 2011

Posted by Bob Cook in Financial Planning & Analysis, Lease Accounting.
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Note:  This post is slightly revised from that which I posted earlier today and which I’ve retracted.  This new post results from further investigations regarding the intent of the boards.  I now do not think it is clear that FASB is trying to finalize the new lease accounting standard by the end of 2011, even though it’s website still shows Q4/2011 as the target for the final issuance.

Yesterday, FASB and IASB announced that they will re-expose the lease accounting proposal.  What this means is that they will issue another Exposure Draft, an updated version of the one issued in August 2010.  This new draft will include modifications made to their proposal during FASB’s re-deliberations over the last seven months.  The intent of re-exposure is to give the public another opportunity to comment.

The Boards seem, though, to want to not let this re-exposure elongate the process of issuing the standard.  They state in their press release (see below): “The boards intend to complete their deliberations, including consideration of the comment period, during Q3 2011 with a view to publishing a revised exposure draft shortly afterwards.”

It’s still an open question, though, as to when the Boards will issue the final standard.  While FASB’s website , still shows the final standard being issued in Q4 of 2011, that website was updated on July 19, a couple days prior to FASB’s last meeting.

I thought (see previous post) FASB might find a way to issue a lease accounting standard quicker by side-stepping the issue of lessor accounting, which is one of the more complex areas yet to be fully re-deliberated, but that’s not going to happen.

So when will standard be issued?   It depends when in Q3 the new ED is released, how long will be the comment period, and whether new substantive issues are raised in the comment period.

Click here for the IASB/FASB press release, which is reproduced below.

IASB and FASB press release:

IASB and FASB announce intention to re-expose leasing proposals

21 July 2011

The International Accounting Standards Board (IASB) and the US-based Financial Accounting Standards Board (FASB) announced today their intention to re-expose their revised proposals for a common leasing standard. Re-exposing the revised proposals will provide interested parties with an opportunity to comment on revisions the boards have undertaken since the publication of an exposure draft on leasing in August 2010.

Even through the boards have not completed all of their deliberations, the decisions taken to date were sufficiently different from those published in the exposure draft to warrant reexposure of the revised proposals. The boards intend to complete their deliberations, including consideration of the comment period, during Q3 2011 with a view to publishing a revised exposure draft shortly afterwards.

Commenting on the decision, Hans Hoogervorst, Chairman of the IASB said:

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.

Leslie F Seidman, Chairman of the FASB, said:

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.

However, the boards decided to make many other changes to address the comments made by stakeholders. The boards decided that, while we still have other matters to discuss, stakeholders would appreciate the opportunity to comment on the revised package of conclusions.

Further details will be available shortly from the leases project sections of the IASB and
FASB websites.

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Comments»

1. adfly cheat - March 8, 2012

Keep on writing, great job!


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