Feb. 25 will be among the more momentous days this year for the Financial Accounting Standards Board. On that day, FASB plans to release its long-gestating standard on lease accounting.
And companies that lease equipment, vehicles and other transportation hardware, real estate and other big ticket items should pay the kind of special attention to the FASB website, www.fasb.org, that many enterprises apparently aren’t paying right now.
That’s the reading—passed along, from anecdotal evidence—by a specialist in lease accounting who has followed FASB’s efforts, and those of the International Accounting Standards Board, for many years. IASB published its own impactful lease accounting standard in January.
"I hear on the street that most lessees do not even have the project on their radar,” wrote the specialist, a consultant for the U.S.’s leading equipment leasing trade group, in an email message sent to his client list and to Bloomberg BNA. “That should change quickly as the FASB announced they will issue the new rules on 2/25/16.”
Not Too Surprising.
The assessment of the leases rules not showing up on corporate radar screens isn’t surprising.
As noted by FASB members at meetings over the years, many companies’ financial executives and accountants often know little about impending accounting standards—and don’t follow rulemaking developments —until the standards have been put between the brown covers of the old FASB statements or, more recently, were actually put into “the Cod.’’ [The latter is an appellation for the board’s Accounting Standards Codification.]
Many of FASB’s company constituents think “moving target” until standards in progress becomes standards in stone.
However, many enterprises, large and small, may want to cast their eyes on the forthcoming standard. It calls for big, and required, changes to the balance sheet. To the tune of billions of dollars in individual companies’ statements of financial position, such as those of big retailers.
Although the U.S. standard won’t be effective for public companies until 2019 and for private enterprises until 2020, a survey of what can be extensive and varied lease portfolios takes time and effort.
[See my blog report of Feb. 12, On "Rev Rec" and Leases: Less Tangible Carrots Amid the Sticks. Note the experts’ advice transmitted under the subhead “Getting Going Now … If Not Sooner.”]
Take a free trial to the Financial Accounting Resource Center to get the information and tools you need for your financial accounting challenges.
Notify me when updates are available (No standing order will be created).
Put me on standing order
Notify me when new releases are available (no standing order will be created)