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Accounting rules set for shake-up
CHANGES to lease accounting rules are set to increase debt loads on company balance sheets by billions of pounds if regulators get the go-ahead for new measures.
The overhaul to how rented assets appear on balance sheets is intended to improve transparency, according to a joint proposal by the International Accounting Standards Board (IASB)?and US regulators.
“Much of the estimated annual $640bn of lease commitments fails to appear on the balance sheet of lessees, thereby giving a false impression of companies’ liabilities and gearing,” said IASB chairman Sir David Tweedie.
The rules could come into place in 2011, though they have already faced stiff criticism in consultations.