The latest draft standard follows several years of re-considering proposals to change the international accounting standard for leases and rental transactions.

Although the boards have chosen to retain a “right of use approach” to lease accounting, the proposals have been substantially modified since they were last exposed for comment in 2010. Amongst the most important changes are a revised definition of a lease and a differentiation in treatment between equipment and real estate contracts.

With the revised draft standard now available for public comment, Leaseurope says  details of the new proposals will need to be carefully assessed. However, it adds that its preliminary view is that both the conceptual soundness and the operability of the proposals are highly questionable. As a result, Leaseurope says it considers that they will not bring about a sufficient improvement in financial reporting to warrant the cost and complexity of changing the existing approach to IFRS lease accounting.

Speaking at a meeting of the heads of European leasing associations gathering in Brussels to discuss the draft, Leaseurope’s director general, Tanguy van de Werve, commented: ‘In an environment where European policymakers are looking to promote businesses’ access to productive assets in an attempt to boost growth, tampering with the current principles-based, conceptually coherent accounting model for leasing is a big risk for the European economy. This is because today’s accounting clearly portrays the economic value of the various forms of lease arrangements out there. These range all the way from financing the use of an asset to providing a service solution where the client is effectively outsourcing all its asset-related needs to a provider.

‘Leaseurope calls on European policymakers, as well as on the many European businesses that use leases and rentals to obtain access to the equipment needed to run their business, to use the opportunity of this consultation to convey this message to the standard setters.’