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FASB reviews decade of lease standards

Nearly ten years after the introduction of its lease accounting standards, the FASB is concluding a formal review of the lessons learned. The review revealed that the costs of compliance were “significantly higher” than anticipated, with an average implementation cost of about $450,000 per company. Board member Christine Botosan emphasized the importance of considering ongoing costs, stating: “Implementation cost is a one-time thing, ongoing costs are forever.” Despite the challenges, Board Member Joyce Joseph noted benefits for investors, including improved comparability and transparency. The review also highlighted how the new rules have influenced business decisions, leading companies to adjust lease terms and payment structures. The FASB aims to apply these insights to future standards and transition processes.

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