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Lessors to help with lease accounting changes

By / 7 years ago / Latest News / No Comments

The new reporting standard, which is currently being formulated by the International Accounting Standards Board, will oblige firms to include "off-balance sheet" assets, potentially including contract hire vehicles, in their main financial reports from 2011 onwards.

But Alphabet says it stands ready to help its customers.

'We will be ready to take the lead if vehicle leases are affected by next year's rule changes,' said Mr Sinclair. 'There are several ways we can help, from providing new fleet reports to smoothing their transition to different funding arrangements if necessary.'

Mr Sinclair has also warned fleets not to pay heed to predictions that the rules will create "massive" increases in cost and complexity, or that they might lead firms to move away from company cars.

'Contract hire will remain popular,' he predicted. 'The main difference under the proposed rules would be that contract hire would go from being cost-effective, "risk-free" and off-balance-sheet to being cost-effective and "risk-free" but on-balance-sheet.'

Mr Sinclair also cautioned those companies that need to avoid bringing assets on to their balance sheets from making precipitate moves, such as forcing drivers to opt out of company cars.

'A less disruptive solution, if your leasing company had the capability, could be to switch cars from Contract Hire into managed ECO. This would provide a more controlled and better quality car scheme than relying on drivers to choose safe, appropriate cars using uncontrolled cash allowances,' he concluded.

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