The new standard is being introduced following concerns that the existing approach fails to reflect the assets and liabilities companies may have under operating leases and looks to streamline the approach to all lease and rental contracts to avoid “structuring opportunities”. This would mean that all leased assets – including those on full-service leasing – would need to be recognised on the lessee’s balance sheet.

The IASB and FASB had published their Exposure Draft in August 2010 and were due to publish the final standard in June this year but had already announced in April that the deadline would be pushed back to the end of the year to ensure the standard ‘will last the test of time’.

Leaseurope had already urged the IASB and FASB to re-expose their proposals, saying that the proposed new standard would have significant impacts on businesses due to the extremely complex and subjective accounting requirements and added that there were a number of significant flaws with the proposals.

The European Financial Reporting Advisory Group (EFRAG), which provides technical expertise to the European Commission concerning the use of IAS within the Europe, had also expressed its concerns over the draft standard, saying that it ‘does not believe that the proposals are effective in addressing the concerns about the complexity of lease accounting and comparability of information’. It added that it is ‘not convinced that the proposals result in information that is relevant to users of financial statements’.

According to the IASB and FASB, re-exposing the revised proposals will enable stakeholders to comment on revisions the boards have undertaken since the publication of the Exposure Draft.

The organisations said: ‘Even through the boards have not completed all of their deliberations, the decisions taken to date were sufficiently different from those published in the exposure draft to warrant re-exposure of the revised proposals. The boards intend to complete their deliberations, including consideration of the comment period, during Q3 2011 with a view to publishing a revised exposure draft shortly afterwards.’

Hans Hoogervorst, chairman of the IASB, added: ‘Although we have yet to conclude our deliberations on this project, the direction of travel indicates that there are aspects of our revised proposals that would benefit from additional input from interested parties.’

The news has been welcomed by Leaseurope. Tanguy van de Werve, Leaseurope’s director general, said: ‘When it comes to standard setting, the devil is in the details and constituents need to have the opportunity to analyse comprehensive proposals to ensure they are being consistently understood and will not have any unintended consequences on European businesses and investment levels. We have high expectations of this re-exposure process and look forward to working closely with the boards and our European interlocutors on this over the coming months.’