Stephen Taub, CFO.com | US
July 21, 2006

Why are the Standards for lease important.

I think that the impact on the financial statements of any companycan be skewd by the exclusion of the off-sheet financing that surrounds the leasing aspects of equipment and any other fixed or real property that is employed by a company to provide revenue, increasr revenue or utimately project higher earnins for the future. In this respect it seems amiss that the governing bodies that be in the standards and practices committees can not get their acts together and issue that one and only standard. As FASB 13 did in the past, why can they not expand and fortify the rulings that would give companies that use leasing, in high degrees, to report these assets as they appear, as assets, with the corresponding loans or leasing debts that are following. We have consitantly changed the idea of the financial statements to report the financial condition, to providing the financial information to make judgements on investment. Why has the effects of Sarbanes-Oxley had such an impact on the financial industry? Because it came about after a problem time. It is supposed to help the investor and the people. Is this not the same case. If I new that a company that I was invested in or to invest in was heavy into the leasing of land and equipment, not shown on the balance sheet, I would look twice at the investment, or keeping the one I have. As a practitioner, I would also look at the potential impact of leases, if they were to be cancelled or not purchased under the terms of the agreement.

I feel that it is come to the time that all standards should be raised to the one level of practice. With the state of the corporate world as it is, more and more acquisitions and mergers, the investor should know, as a standard reporting requirement, the impact of the leases on current financial data, the impact on the cash flow,it they had to purchase the assets, and the impact on the future profit potential of the business should the leases be cancelled.

Posted by ANTHONY CELLA | Aug 31, 2006 1:36 PM ET