We support the IPSASB’s proposals in ED 75 to develop a standard based on IFRS 16 Leases, including aligning the requirements to account for lessor accounting with IFRS 16. Overall, we have not identified any public sector-specific reasons to diverge from the requirements in IFRS 16.

We recommended the IPSASB take into account a number of practical challenges that have been identified during the first time implementation of IFRS 16 along with other matters that are currently being considered by the IASB as potential amendments to IFRS 16 (e.g. lease liability in a sale and leaseback) when finalising and implementing the proposed ED 75. 

We support the IPSASB’s plan to address the accounting treatment of concessionary leases and other similar arrangements separately through phase two of the leases project. However, we recommended the IPSASB provide explicit scope exclusion in ED 75 for all concessionary leases/similar arrangements until phase two of the project is completed.

Request for Information - Concessionary Leases and Other Arrangements Similar to Leases

There are several examples of concessionary leases and other arrangements similar to leases across the public sector in both Australia and New Zealand.  We noted the following key matters in our submission:

• Such arrangements are accounted for based on the actual rental payments made and not at fair value or other alternative accounting approaches.
• The current cost-based approach to accounting for concessionary leases and other similar arrangements are considered to be meeting the information needs of users.
• In respect of leases and other arrangements similar to leases, no formal contracts or documentation are established in several instances.
• Consider such arrangements from an economic activity perspective rather than a financial perspective. Establishing and disclosing the underlying economic rationale for why a “concession” is provided as part of a lease or other arrangement may provide more value to users of such information than to place a monetary value on such concessions.