The association's comments come after the release by the IASB and FASB in August this year of a draft standard setting out how businesses should account for their lease and rental transactions, which is said to be significantly flawed.

Leaseurope says that the new standard will have significant impacts on businesses due to the extremely complex and subjective accounting requirements. In fact, the association says that there may be wider economic consequences if leasing becomes less readily accessible for businesses as a result of the proposals.

Furthermore, Leaseurope says the new standard may fail to provide the users of financial statements (such as investors, analysts, credit rating agencies and lenders) with a real improvement in financial information compared to the current accounting for leases.

In its comment letter to the Boards, Leaseurope has also highlighted a number of significant flaws with the proposals. Among these, one of the most fundamental issues that has yet to be resolved is what the definition of a lease contract actually is. The association is also concerned that the conceptual premise of the basic model for lessees, known as the right of use approach, has not been applied consistently throughout the proposals, and notably to the accounting from the perspective of lessors.

It says that these views have been echoed in a joint statement issued today (21 December) by international leasing industry associations representing approximately 90% of the global leasing market.

Tanguy van de Werve, Leaseurope's director general, said: 'Given the number of major issues that still need to be worked through and the disproportionate nature of the current proposals, Leaseurope is of the opinion that Boards are not close enough to a high quality standard to be able to respect their June 2011 deadline.

'We are therefore calling on the IASB and FASB to modify and re-expose their proposals for lease accounting. While accepting that this will imply a delay to the process, we believe it to be essential if the Boards are to reach their objective of an improved and converged international accounting standard for leases. Quality must take precedence over speed.'