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LeasingWorld MARCH 2011 VOL 6 I NO 65 FOR THE EQUIPMENT LEASING AND ASSET FINANCE PROFESSIONAL Untangling the accounting mess


Until recently the question on people’s minds was whether the leasing industry’s energetic campaign against the IASB’s new lease accounting proposals was going to make any meaningful difference to the end result. Now the question is not whether, but by how much


ow many Exposure Draft (“ED”) comment letters would it take for the IASB to sit up and take notice that something was not right with its proposals? There were 782 comment letters submitted to the August 2010 ED, mostly following a common theme. They’d start politely, applauding the IASB’s goal to improve worldwide accounting standards, BUT from then on it was a litany of “we struggle to understand,” “conceptual inconsistencies,” “too complex,” and “not fully worked out.” If this were an academic environment it would make the IASB’s thesis a C-minus, with a strong recommendation for major revisions. Why were the IASB’s proposals such a poor piece of work? Even at this late stage board members involved in creating the ED talk of the need to create basic lease models in order to test their solutions. It’s hard to imagine how they could have let themselves get this far without first having completely familiarised themselves with a comprehensive set of typical leases? Since the February IASB/FASB board meetings on Leases, the leasing industry itself may be thinking, “We’re getting traction at last, don’t knock it.” On the other hand, Yes, we are chipping away at it, but there is still further to go. The first IASB/ FASB board meeting in February did not bode well for leasing. The comment letters had been summarised by that point, and the item being discussed was the distinction between service contracts and leases, one of the contentious areas. What would one expect the tone at that board meeting to be after such a weight of adverse comment from the World Bank, EFRAG, Standard & Poor’s, and many more like them? Here’s an extract from the official podcast that followed? Cautious?


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Conciliatory? Judge for yourselves from this part of the summing up, “I don’t think that people felt that the distinction between a service and a lease was wrong in the Exposure Draft.” Oh, didn’t they? Would the next board meeting, in mid-February, be in a similar vein? Sir David Tweedie introduced the mid-February board meeting podcast. Incidentally, the IFRS podcasts are an excellent way to hear from the horse’s mouth what the current state of play is, this one can be heard at http://media.iasb.org/IASBboardweek15_18022011.mp3


Continued on page 6


■ SPECIAL REPORT People and Recruitment PAGE 32 ■ FEATURE Grim tales of the leasing trade PAGE 13 ■ NEXT MONTH Mobile Computing


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