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Accounting for leases – lessons from COVID-19

Accounting for leases – lessons from COVID-19 The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have given relief to lessees in response to the coronavirus (COVID-19) pandemic. However, it is not clear why any relief from the requirements in International Financial Reporting Standards (IFRS) or the Accounting Standards Codification (ASC) should be necessary. The purpose of this paper is to highlight weaknesses in how the IASB and FASB developed their leases Standards, and why those Standards are not robust enough to cope with a shock to the economic system.Design/methodology/approachThe COVID-19 relief suspends some features of the leasing requirements rather than changing them. What if other economic or regulatory events cause the same circumstances to arise?FindingsHave COVID-19 exposed weaknesses in the leasing standards that should have been avoided when they were developed or is COVID-19 the problem?Originality/valueAnalysis of actual board discussions and staff papers is unusual and provides insights into the standard-setting process. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

Accounting for leases – lessons from COVID-19

Pacific Accounting Review , Volume 33 (2): 8 – Aug 10, 2021

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0114-0582
eISSN
0114-0582
DOI
10.1108/par-09-2020-0186
Publisher site
See Article on Publisher Site

Abstract

The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have given relief to lessees in response to the coronavirus (COVID-19) pandemic. However, it is not clear why any relief from the requirements in International Financial Reporting Standards (IFRS) or the Accounting Standards Codification (ASC) should be necessary. The purpose of this paper is to highlight weaknesses in how the IASB and FASB developed their leases Standards, and why those Standards are not robust enough to cope with a shock to the economic system.Design/methodology/approachThe COVID-19 relief suspends some features of the leasing requirements rather than changing them. What if other economic or regulatory events cause the same circumstances to arise?FindingsHave COVID-19 exposed weaknesses in the leasing standards that should have been avoided when they were developed or is COVID-19 the problem?Originality/valueAnalysis of actual board discussions and staff papers is unusual and provides insights into the standard-setting process.

Journal

Pacific Accounting ReviewEmerald Publishing

Published: Aug 10, 2021

Keywords: FASB; IASB; COVID-19; Leases

References