Professor On Lease-Accounting Rules Rewrite: 'It's About Time'
The Financial Accounting Standards Board today is expected to announce that it's going to begin a restructuring of its standards for lease accounting.
UNIVERSITY PARK, PA (July 19, 2006)—The Financial Accounting Standards Board today is expected to announce that it's going to begin a restructuring of its standards for lease accounting.
J. Edward Ketz, associate professor of accounting at Penn State's Smeal College of Business, argues that the current rules mislead lay investors and applauds the FASB for finally beginning an overhaul.
"The current FASB rules allow corporations to make believe that significant assets and liabilities don't exist," Ketz says. "In fact, several corporations have $10 to $15 billion of off-balance sheet lease liabilities. To the inexpert investor, these hidden liabilities can seriously affect the perceived financial well-being of a corporation, influencing the decision to invest on false pretenses.
"It's about time that the FASB rewrites these rules that essentially let corporations hide trillions of dollars of debt from American investors."
