On May 16 a long anticipated proposal was released by the Financial Accounting Standards Board and the International Accounting Standards Board on lease accounting. The exposure draft outlined proposed changes to reporting requirements for the lessee and lessors of assets. Comments on the exposure draft are due September 13, 2013. IREM will submit comments with coalition groups.
Since 2010 the lease accounting changes have been delayed due to stakeholder comments and the potential negative effects on a global scale from accounting changes. IREM was greatly concerned with a broad change to all leasing reporting requirements because there was no distinction between equipment and real estate which cover a wide spectrum of leasing terms. In the 2013 exposure draft there are two types of leases: Type A for equipment and Type B for real estate.
While the 2013 exposure draft takes into consideration some of the unique characteristics of real estate, IREM is concerned with the complexity of the reporting requirements and the depth of information covered within the exposure draft. Over the next few months, IREM will review the exposure draft, work with industry partners, collect membership input and finally submit comments by the September due date.
IREM will continue to provide updates on the FASB lease accounting changes. Prior to release of the exposure draft, 13 members of Congress signed onto a letter submitted to FASB. The National Association of REALTORS led the effort, which is consistent with IREM policy, to collect signatures on behalf of commercial real estate practitioners. The sign-on letter focused on the fact that FASB or IASB have not released a cost-benefit analysis of the lease accounting proposal which “may cause unintended consequences harming businesses, real estate and the investors who provide capital.” Review the sign-on letter to FASB.
Click here to view the draft