LONDON Nov 6 Corporate lobbying is on the verge
of derailing an attempt by regulators to make companies account
more clearly for leased equipment, the head of a global
accounting rules body said on Tuesday.
The International Accounting Standards Board and its U.S.
counterpart, the Financial Accounting Standards Board, agreed in
June to require companies to put leases longer than a year on
their balance sheets.
The aim is to give investors a clearer picture of financial
exposures as firms lease much of the equipment they use to run
their business, from airplanes to photocopiers.
Currently the costs, estimated at over $1 trillion globally,
are tucked away in disclosures, but companies fear investors
will take fright at swollen balance sheets which could raise
The IASB and FASB will consult early next year on the rule
which is due to come into force around 2016, but the industry is
mounting a fierce rearguard campaign to scrap the change.
"The fact is we are still facing an uphill battle. We will
need all the help we can get to ensure that we do not get
lobbied off course," IASB Chairman Hans Hoogervorst told
students at the London School of Economics on Tuesday.
The U.S. Chamber of Commerce says the change would cost
190,000 jobs, while 60 members of Congress warned in May of
Leaseurope, whose members granted new leases worth 224
billion euros last year, is also hostile.
"After six years of re-deliberations, we consider that the
proposals due to be re-exposed are not an improvement over the
existing leases standard and do not warrant the cost and burden
of change," Leaseurope said in a letter to the IASB last month.
Hoogervorst called on national accounting bodies, regulators
like the U.S. Securities and Exchange Commission and investors
to speak up for the greater transparency the rule would bring.
"We really need their vocal support to counter what is a
well-funded and well-resourced lobbying campaign," he said.
Hoogervorst's predecessor, David Tweedie, once said he
wanted to cross the Atlantic in a British Airways plane that was
on the airline's balance sheet.
Under the proposed rule, all leases lasting over a year
would be on balance sheet.
After earlier opposition, the boards dropped their plan for
equipment and property leases to be treated in the same way.
Costs on equipment leases would now be "front loaded", while
those for property spread across the life of the contract.
Another retreat would cast further doubt over attempts to
create a global set of accounting standards as requested for the
fourth time in three years on Monday by the world's leading
(Reporting by Huw Jones)