BOMA San Francisco Members:
BOMA International opposes altering the current lease accounting standards in such a way that will negatively impact the real estate industry and economy as a whole by requiring businesses to unnecessarily burden their balance sheets with additional liabilities that do not recognize true economic reality.
Earlier this year the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued a joint exposure draft that, if implemented, will completely revamp the way leases are accounted for by both lessees and lessors.
Generally speaking, the proposed changes would move the cost of operating leases from a disclosure in the footnotes onto the balance sheet. Ramifications of the proposed changes could prove harmful to the commercial real estate industry. The ultimate intent of the change is to bring additional “sunshine” to lease accounting to items not currently on the balance sheet. BOMA International along with others believe FASB/IASB need to take more time to ensure the final standard is sound and thoroughly vetted.
Coalition Urges Re–Exposure of Final Lease Accounting Standard
In an April 26 letter, BOMA International, along with 27 other industry groups, urged the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to, among other things, fully re–expose the final proposed leasing standard for comprehensive public input and comment. In addition, the letter expressed concerns over the Boards’ handling of lessees’ accounting for costs of leases formerly classified as operating leases and requested that an economic impact study be conducted prior to implementation. In a process that began nearly two years ago, FASB and IASB continue consideration of a new standard for lessees of commercial property and continue delaying the final standard, making it difficult to speculate when this process will be concluded.