Global businesses are unaware of the upcoming
changes to lease accounting, expected to require moving all but
short term-leases on to the balance sheet, according to Grant
Thornton International’s business report.
The survey of 2,800 businesses globally found
more than half (54%) of respondents are unaware of the upcoming
changes to lease accounting on the back of the International
Accounting Standards Board’s (IASB) and Financial Accounting
Standards Board (FASB) convergence project with awareness regarding
the project the highest in the US, 69% of businesses up to speed,
followed by Turkey (14%).
However, the awareness of the changes was at a
much lower rate in China (6%) and Denmark (8%).
Out of the businesses that were aware of the
forthcoming changes, 33% thought they will increase cost and
complexity while 15% thought it would increase
transparency.
The IASB and FASB are set to re-expose their
latest lease proposal at the beginning of next year.
Grant Thornton International chief executive Edward Nusbaum said
the survey findings should give the boards pause for thought “as
businesses are seeing costs and complexity in the proposals but are
questioning whether there is any improvement in
transparency”.
“The boards have a difficult task, but we
encourage them to look closely at two issues: first, whether the
leasing proposal is sufficiently aligned with the ongoing review of
revenue recognition; second, whether they have adequately
distinguished leases from other types of contract which, under
current standards, are not generally recognised in the financial
statements at all,” he said.
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