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February 16, 2011

US companies unprepared for leasing rules

Just 7% of company executives believe they are prepared to comply with lease accounting standards as proposed by the US standard setter, according to a Deloitte US survey.

Deloitte said that 80% of the survey respondents believe the new lease accounting standard by the Financial Accounting Standards Board (FASB) will place a significant burden on financial reporting for tenants as well as property owners.

More then 40% of the respondent said the standards would make it more difficult to obtain financing and 68% said it would have a material impact on their debt to equity ratio.

The respondents have also said that the new standard will require additional investment in their IT system. “One-quarter of respondents said their companies are likely to have to make a major upgrade to their information technology systems, while 20 percent said they are likely to acquire a new system,” Deloitte said.

The survey commissioned by Deloitte was conducted online in December and gathered the opinions of 248 US executives.

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