The Governmental Accounting Standards Board (GASB) issued Preliminary Views, Leases, which includes proposals to improve the accounting and financial reporting for leases for state and local governments from both a lessee and lessor perspective.
Many governments use leasing to finance certain necessary items including vehicles, heavy equipment and buildings without having to actually purchase them. Some governments also serve in a lessor capacity by leasing assets to other entities.
The purpose of the Preliminary Views is to obtain comments from stakeholders on the board’s views before developing more detailed proposals for changes to existing accounting and financial reporting standards. The Preliminary Views presents the board’s current thinking on the issues associated with accounting for leases—which are based on the foundational principle that all leases are financings of the right to use an underlying asset.
The document includes proposals on how leases would be presented in the financial statements and essential information related to leases that governments would disclose in the notes.
“The Preliminary Views more closely aligns the accounting and financial reporting for leases with the economic substance of those transactions,” said GASB chair David A. Vaudt. “The board has an opportunity to make changes to the current guidance on leases that would result in greater transparency, reduced complexity in application, and more meaningful information for financial statements users.”
REF: GASB News Release 11/20/2014
