CA ANZ and CPA Australia have lodged a joint submission on the IPSASB Exposure Draft (ED) 84 – Concessionary Leases and Right-of-Use Assets In-kind. It proposes to amend IPSAS 43 Leases and IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers) to introduce new accounting requirements for concessionary leases and right-of-use assets in-kind for lessees and lessors. This consultation follows the Request for Information – Concessionary Leases and Other Arrangements Similar to Leases (RFI) which CA ANZ and CPA Australia jointly responded to in May 2021.

The key points in our joint submission are:

• We do not consider that the IPSASB has sufficiently addressed our concerns raised in response to the RFI. 
• The financial reporting problem the proposals in the ED are trying to address is not clear. 
• The Australian experience suggests that the cost-based approach, supplemented by disclosures about the nature and terms of the arrangement, provides sufficient information for users.
• We do not support the proposal to initially measure concessionary leases and right-of-use assets in-kind at the present value of payments for the lease at market rates.
• We are of the view that right-of-use assets in concessionary leases should be measured in all circumstances at the present value of contractual payments for the lease.
• We agree with the proposal for lessors to account for operating leases at below-market terms in the same way as for operating leases at market terms.
• We do not agree with the proposal for lessors to account for finance leases at below-market terms in the same way as for finance leases at market terms.We recommend the disclosures focus more on qualitative information explaining the underlying nature of the concession and its purpose/objectives, as this may provide more value to users of such information than to place a monetary value on such arrangements.