How do you view the proposed approach to lease accounting as described in the IASB/FASB discussion paper?
Erik Henstra: LeasePlan fully understands the objectives of the IASB and FASB to improve transparency and insight into financial accounts for its users, and to reduce complexity. However for full service leasing, which is driven more by outsourcing objectives, the benefits of the revised accounting standards are not evident at this point in time. The proposed approach seems to be predominantly relevant to 'big ticket' items, where leasing is used as a structured finance solution for capital intensive industries

What are some of your reservations concerning this paper?
Erik Henstra: We have serious reservations towards the application of the proposed approach to full service leasing solutions for smaller assets such as company cars. The proposed approach is very complex and labour intensive and could add a high level of subjectivity in the financial statements. For example, lessees could be required to record each car separately and to assess per financial statement date the assumptions underpinning the 'right of use' i.e. expected duration and mileage for each car. The resulting increase in workload for lessees would bear little relevance in case the assets, risks and services are outsourced to third parties like leasing companies. Our key concern is that no proper business impact has been performed by the IASB and FASB so far. We believe this is crucial to ensure that the benefits of the new approach in terms of improved transparency in financial reporting clearly outweigh the associated costs and complexity.

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