The IPSASB Exposure Draft (ED) 88 Arrangements Conveying Rights over Assets carries forward the proposals in ED 84 Concessionary Leases and Right-of-Use Assets In-kind into the new standards: IPSAS 47 Revenue and IPSAS 48 Transfer Expenses. It proposes amendments to IPSAS 47, as well as new illustrative examples in IPSAS 47 and IPSAS 48.

In our joint submission with CPA Australia, we reiterate that we do not support the proposal to measure concessionary leases and right-of-use assets in-kind at the present value of payments for the lease at market rates based on the current use of the underlying asset. This is for the reasons outlined in our joint submission to ED 84, and our preceding joint submission to the Request for Information – Concessionary Leases and Other Arrangements Similar to Leases. 

In these joint submissions, we raised concerns that the costs of determining the fair value of right-of-use assets arising from concessionary lease arrangements were likely to exceed any expected benefits. As the proposals in ED 88 have not changed from ED 84, our concerns remain unaddressed.

We reiterate our support for an accounting policy choice of the cost-based approach, supplemented by disclosures about the nature and terms of the arrangement.