IPSASB is requesting information on public sector lease arrangements

The IPSASB has issued a Request for Information (RFI), Concessionary Leases and Other Arrangements Similar to Leases to support the second phase of its lease project. The second phase aims to address public sector issues specific to concessionary leases as well as other arrangements similar to leases.

The IPSASB seeks information on the nature of concessionary leases and other arrangements similar to leases that are common in the public sector, and their current accounting.

The following arrangements are identified and discussed in the RFI:

Concessionary leases: These are leases at below market terms. The lease has a concessionary/subsidy element representing the difference between the market value of the lease and the consideration payable as per the lease agreement.

Leases for zero or nominal consideration: These leases are similar to concessionary leases however these arrangements are at zero or nominal consideration. For example – lease a building for free.

Access rights: These lease arrangements transfer the access rights to the lessee instead of the full rights associated with a lease. The limited rights make it impossible for a lessee to demonstrate control over the leased asset. For example – rights of access to property or land i.e. servitudes.

Arrangements allowing right-of-use: These types of arrangements allow an entity to use third party assets (e.g. trust or non-governmental entities) to deliver services. The arrangements are usually not formal and subject to no agreements.

Social housing rental arrangements: These types of arrangements for social housing may take different forms and are usually subject to legislation. In some arrangements the lessor has rights to terminate the arrangement while others have no expiry and there is no obligation for the tenant to return the asset. For example – accommodation for low cost housing.

Shared properties with or without lease arrangement: These arrangements include sharing of property by entities to provide services (co-location). It is common for these arrangements not to be documented in a lease contract or for no consideration to be payable in the arrangement.

Please assist us with information on the arrangements above, or any other arrangements that are common in the public sector. The RFI is open for comment until 30 April 2021.

Access the RFI by following this link.