TRALA Pushing for Simplicity and Accuracy in New Lease Accounting Standards
The Truck Renting and Leasing Association (TRALA) today strongly urged the Financial Accounting Standards Board to develop a less complex proposal for accounting for leases that more closely reflects the reality of lease transactions in the truck transportation industry. TRALA's comments were made today in a letter responding to the FASB's most recent Exposure Draft of proposed new lease accounting standards, initially released in May 2013.
The FASB, in conjunction with its international counterpart the International Accounting Standards Board (IASB), has been working for many years to develop a new standard for lease accounting. The Boards' most recent proposal would force all current operating leases to be capitalized and included on lessees' balance sheets. However, TRALA argues that the Boards' have developed an overly complex standard that goes beyond the simple capitalization of operating leases.
"While TRALA appreciates the FASB's willingness to work together with the industry to develop effective standards, the most recent proposals still go beyond capitalization with unnecessary complexity and associated burdens and costs for lessors and lessees," said TRALA President and CEO Tom James.
In its letter, TRALA urges the Boards to consider the benefits of new, complex standards as compared to the costs of implementing them. TRALA's concerns are highlighted by several recent statements questioning the need for new capitalization standards from organizations representing the users of financial statements. These include the American Accounting Association and the European Financial Reporting and Advisory Group. TRALA also argues in its letter that new leasing standards should be in line with current U.S. commercial law and tax regimes.
"There are many positive reasons to work with a leasing partner to acquire and maintain commercial vehicles," said James. "The newly proposed standards seem to be aimed at fixing a disclosure problem that does not exist in the current truck leasing industry."
A copy of TRALA's September 10 letter to the FASB can be found here
For questions, contact TRALA's Tom James at email@example.com or by calling (703) 299-9120.