AICPA Groups Comment on GASB’s Proposed Lease Guidance

August 25, 2016

The American Institute of CPAs’ (AICPA) State and Local Government Expert Panel (SLGEP) and Private Companies Practice Section (PCPS) Technical Issues Committee (TIC) have submitted comment letters on the Governmental Accounting Standards Board (GASB) Exposure Draft (ED), Leases.

The SLGEP wrote in its July 12 letter that it believes the single approach model to consider all leases as financing arrangements is conceptually sound.  However, the SLGEP encouraged the GASB to gather more specific feedback on the challenges that the single model may have on certain types of entities (e.g., governmental health care organizations) and describe its findings in the Basis for Conclusions of the final standard.  The Panel’s recommendations are similar to those posed in its March 19, 2015 letter to GASB in response to the Preliminary Views on the same topic.

TIC wrote in its June 7 letter that certain revisions and clarifications were necessary before the final Leases standard is issued to mitigate the cost of implementation and to improve clarity.  TIC requested a practical expedient for governments when performing price allocations for contracts with multiple (i.e., leasing and nonleasing) components and suggested disclosure objectives and aggregation guidance for the notes to the financial statements to help governments prioritize the notes and reduce unnecessary disclosure volume wherever possible.  TIC also asked for a definition of biological assets and clearer guidance concerning the classification of the lessee’s right-to-use asset.  TIC presented its comment points and answered the Board’s questions about them at the GASB’s public hearing on June 29.