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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

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The Best Defense
Location: BlogsAAO Weblog (Public)    
Posted by: Jack Ciesielski 5/23/2006 7:24 AM
is a strong offense.

While the FASB hasn't yet formally added a lease accounting project to its agenda, it will likely do so by the end of June. Remember, the Board received a prompt from the SEC in its white paper report in June 2005. Some folks take exception to tinkering with lease accounting, and they're mounting an offense before it's added to the FASB agenda.

The Equipment Leasing Association has issued a white paper that "examines the myths that critics assert as supporting evidence that something is wrong with the US lease accounting rules; the analysis also will explode these myths and provide a view of reality."

If you don't want to read the paper, you can pretty much pick up the flavor from the press release entitled "Misguided Criticism of Lease Accounting Standards Exposed by New Equipment Leasing Association White Paper."

I was surprised to find a quote in the paper from me, dating back to last year's corporate spasm of lease restatements; I said in USA Today "the misstatements do not appear to have been intentional and the financial effects only minimal. I think it was just a bad policy.”

I still do. But those remarks are a pretty narrow slice. I also think that lease accounting needs to be revisited. A financial reporting system that lets companies show a return in the income statement from invisible assets and invisible financing is not giving investors the whole, clear picture of the firm's rights and responsibilities.

You can quote me on that.
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