Global Task Force
FASB-IASB: Proposed Changes to Lease Accounting
In August 2010, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), collectively the “Boards,” issued the Original Exposure Draft (OED) for the “Leases” project. A proposal requiring all leases to be capitalized (i.e., on balance sheet). Just shy of three years after issuing the OED, the Boards issued the Revised Exposure Draft (RED) in May 2013, which represented the culmination of the Boards’ deliberations after receiving 800 comment letters and holding numerous joint working group meetings, public roundtables, workshops, webcasts and other outreach activities related to the OED. While the RED addressed some of the concerns arising from the OED, it still drew an additional 600 comment letters voicing continued concerns over its complexity and burdensome requirements.
Now, two years after issuing the RED and five years after issuing the OED, the Boards are targeting year-end 2015 for issuance of the new standard. While no formal announcement has been made relative to the effective date of the new standard, it is likely going to be 2018 for public companies and 2019 for non-public companies. As this new standard will have a significant impact on companies who follow U.S. GAAP or IFRS, we encourage you to review the most recent update by CBRE’s Task Force on Lease Accounting to understand in greater detail the requirements, nuances and financial implications of the Leases standard as currently proposed.
As has been the case for five years now, CBRE’s Task Force will continue to keep you posted as this epic project progresses towards the finish line.
As we await the final Leases standard to be issued, there are several steps companies can undertake prior to its issuance to avoid being caught flat-footed once the Boards give the green light. Please read this excerpt from CBRE’s Global Viewpoint White Paper for further insight into this topic.