Leaseurope released an announcement stating that new proposals to change to IFRS lease accounting may hinder much-needed EU economic growth.

Leaseurope’s news release reads as follows:

After several years of re-considering proposals to change the international accounting standard for leases and rental transactions, the IASB and FASB have released a revised draft standard for public comment.

Although the boards have chosen to retain a “right of use approach” to lease accounting, the proposals have been substantially modified since they were last exposed for comment in 2010. Amongst the most important changes are a revised definition of a lease and a differentiation in treatment between equipment and real estate contracts.

The details of the new proposals will need to be carefully assessed. Nevertheless, the preliminary view of Leaseurope, the trade body representing the European leasing industry, is that both the conceptual soundness and the operability of the proposals are highly questionable. As a result, Leaseurope considers that they will not bring about a sufficient improvement in financial reporting to warrant the cost and complexity of changing the existing approach to IFRS lease accounting.

Speaking at a meeting of the heads of European leasing associations gathering in Brussels today to discuss the draft, Leaseurope director general, Tanguy van de Werve commented: “in an environment where European policymakers are looking to promote businesses’ access to productive assets in an attempt to boost growth, tampering with the current principles-based, conceptually coherent accounting model for leasing is a big risk for the European economy. This is because today’s accounting clearly portrays the economic value of the various forms of lease arrangements out there. These range all the way from financing the use of an asset to providing a service solution where the client is effectively outsourcing all its asset-related needs to a provider.

Leaseurope calls on European policymakers, as well as on the many European businesses that use leases and rentals to obtain access to the equipment needed to run their business, to use the opportunity of this consultation to convey this message to the standard setters.”

To access Leaseurope’s release click here.