Two organizations submitted comments to the Financial Accounting Standards Board (FASB), stating their concerns about the board's Exposure Draft, with the Equipment Leasing and Finance Association (ELFA) calling for less complex lease accounting rules.
The ELFA and the Truck Renting and Leasing Association (TRALA) submitted comments to FASB about proposed changes to lease accounting rules. ELFA calls for an extension of the June 2011 deadline for final consideration.
ELFA also seeks a new lease accounting standard that "reflects the economic substance of transactions and improves the clarity in financial reporting," wrote David A. Merrill, ELFA chairman and president of Fifth Third Leasing Co., in a letter to FASB.
Merrill also wrote that the proposed rules "create a significant compliance burden for lessees and lessors, and replace sound lessor accounting models with untried approaches that do not reflect the economics of the transaction." His letter cautions that financial reporting by both lessees and lessors will be less transparent and more difficult to understand under the proposal.
Merrill adds that the proposed lessor accounting models-the performance obligation and the derecognition approaches-are not improvements over the existing lessor models. Instead, ELFA states, they introduce an unnecessary degree of complexity. He noted that dozens of other organizations, including the U.S. Chamber of Commerce and the Real Estate Roundtable, have expressed concerns about the lease accounting proposal.
TRALA, in its comments submitted to FASB, stated that the rules will affect businesses' ability to borrow and raise capital, and added that ensuring that the lease accounting proposals are designed and implemented appropriately were extremely important, rather than "to rush to achieve a self-imposed deadline."