Public Benefit Entities -New Rules for Accounting for Leases
The long-awaited new accounting requirements for leases for Tier 1 and Tier 2 Public Benefit Entities (PBEs) will be released later this year as an exposure draft by the External Reporting Board (XRB) in New Zealand. Read more here.
The exposure draft will be based on the International Public Sector Accounting Standards Board’s (IPSASB) final pronouncement on lease accounting – IPSAS 43 Leases. IPSAS 43 is based on the accounting requirements of the for-profit standard IFRS 16 Leases. You can read more about IPSAS 43 here.
While the XRB is still to determine an effective date of the new lease standard, it is anticipated, however, that the standard will be available for early adoption in 2023 with mandatory adoption no earlier than 2026 – i.e., the XRB plans to provide PBEs with a long implementation period, due to the complexities contained within the new requirements.
For all PBEs with lease contracts (especially for those where the PBE is a lessee), it is highly recommended that a plan be put in place for a transition strategy to assist you with transitioning to the new requirements as soon as is practicable, due to the complexities contained within IPSAS 43 (and expected to be contained within the new XRB lease standard).
We will be covering these new requirements for PBE lease accounting in more detail in future editions of Accounting Alert.
For more on the above, please contact your local BDO representative.
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