Leaseurope submitted a paper on possible effects of the new international accounting standard for leasing, IFRS 16, on the European public good to the European Commission.
The Leaseurope paper is intended to supplement the IFRS 16 Endorsement Advice that was recently issued by the European Financial Reporting Advisory Group (EFRAG) to the commission. It covers a range of factors that were not analyzed by EFRAG or where Leaseurope believes additional analysis is required.
Leaseurope argues that further analysis of the costs and benefits of IFRS 16 on Europe’s small- and medium-sized enterprises (SMEs) is required. International accounting standards are used by fewer than 1% of European enterprises, but many national accounting standards in Europe are designed to be consistent with the international rules. Leaseurope is calling on the commission to make clear that the standards are not suitable for use by SMEs at the time of endorsement.
Other recommendations include allowing European companies that use international standards up to an additional year to implement the new rules, and requiring the International Accounting Standards Board to clarify how the standard should be applied when being used to report vehicle and equipment leases in Europe.
Leon Dhaene, Leaseurope’s director general, said, “Existing users of international accounting standards are already preparing to implement IFRS 16, but it is important now that it is made clear the new rules would be an unnecessary and costly burden for the other 99% of companies that follow accounting rules that are written here in Europe.”
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