There always is talk of the demise of off balance sheet leasing, but I don’t think it will ever really die. Yes, FASB 13 will change, but take heart my friends, even that isn’t coming any time soon. According to FASB Project Manager Danielle Zeyher, the FASB Staff is conducting research regarding a possible project on lease accounting that might amend or replace FASB 13. This information was presented recently to the Financial Accounting Standards Advisory Council (FASAC).
What this means to you and me is that the FASB Staff believes that a project on improving lease accounting should be added to the FASB’s agenda. They still do not know the timing and scope of the proposed project. Until the lease accounting project actually is added to the agenda, there will not be any changes to FASB 13. Even when it is added, there will be research, an exposure draft, public comment, and revisions before a final statement is issued. How long should that take? Well, the changes to accounting for income taxes under FASB 109, once on the agenda, took in excess of five years to complete.
So what are the chances of this happening soon? The big issue is the approach taken on the project. The FASB has several options. One, as expressed as being preferable by several FASAC members, is to take a ‘clean sheet of paper’ approach, which would be a complete revision. Another is to alter and/or modernize the lease accounting standards. The FASB also could use a combination of the two. A complicating factor, and one likely to extend any action on changing FASB 13, is the convergence issue between IAS 17 and FASB 13.
The International Accounting Standards Board (IASB) does not want ‘fixes’ made to lease accounting, as discussed in theMemorandum of Understandingbetween the FASB and IASB. Instead, they would like to see a fresh start to the lease accounting rules of FASB 13 and IAS 17. This increases the likelihood of a ‘clean sheet of paper’ approach to changing FASB 13, which, in turn, adds to the amount of time required to make any changes to that illustrious document. (As a side note, I have an original FASB 13, as issued in 1976. Do you think I could sell it on eBay?)
The bottom line is that I don’t expect to see anything change before 2010. In the meantime, make hay, people! That sun is still shining.
Hey shawn-
have you talked to ed vanderslice. he's working at a company called accruit in denver that does like-kind exchange stuff with leasing companies. thought it might be another topic for you. Not that leasing in Ghana isn't interesting. Ed's cell is 303-918-3750
Posted by: jeff Negri | March 14, 2006 10:14 AM | Permalink to Comment