While Grant Thornton commends the IASB and FASB for continuing to work jointly on the critical issue of lease accounting, we are not in favour of proceeding with finalisation of the current exposure draft in its current form. We believe the latest proposals would not improve financial reporting and would require substantial implementation costs.
The IASB and FASB should continue to work together to improve lease accounting and develop an alternative model that would provide users with information that is more relevant and representationally faithful, more understandable, less complex and conceptually consistent with the accounting for similar transactions with customers or acquisitions. In our comment to the two Boards we propose that an alternative, control-based model may well offer an appropriate long-term solution for lease accounting.
The magnitude and impact of the lease project cannot be overstated: a Grant Thornton global survey of 3,000 businesses in 42 countries found that 78% of businesses have leases with the average number of leases held by each business at 20.
We therefore encourage the IASB and FASB to further develop a model for accounting for leases in a manner that would curtail current abuses and provide relevant and representationally faithful information to users of the financial statements.
You can read the entire Grant Thornton comment letter on our website.
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