Proposed lease accounting shake-up will add debt

The proposals by the International Accounting Standards Board (IASB) and Financial Accounting Standards Board’s (FASB), published in May, represent a major shake-up of lease accounting that could have a significant impact on the shipping industry.   The findings are published in two separate reports from KPMG.

John Luke, lead partner of the firm’s transport practice, comments: “This is one of the most far-reaching accounting shake-ups proposed since the International Financial Reporting Standards (IFRS) were widely adopted”.

“If these proposals come into effect in 2017, the consequences particularly for the shipping industry will be far-reaching.  If companies have to add billions of pounds of debt on to their balance sheets, it will ultimately affect banking covenants, taxation and possibly the ability to pay dividends,” he continued.