EFRAG's concerns around the application of the right-of-use model are expressed as follows:

The IASB has emphasised in its communications that the project was intended to recognise financial liabilities that are currently left off balance sheet. Focussing on this objective seems to have been the primary driver behind the development of the right-of-use model. This model is based on a notion that an asset is a bundle of rights, one of them being the right-of-use; this is a new approach, which has never been debated on a conceptual level and we are not convinced that the focus on liability recognition has led to capturing the right population to which the right-of-use model should be applied. This is in our view illustrated by the inconsistencies in the proposed application, in particular the use of two measurement bases and different accounting for lessors and lessees which will add to the perception of complexity.

EFRAG believes there is a need to need to fully explain the project from a conceptual perspective, and so recommends that the IASB finalise its project in a series of steps. EFRAG recommends the introduction, "without delay", of enhanced disclosures for lease arrangements, and then refining the concept of 'right-of-use' (and how this right is distinguished from other rights bundled in an asset) as part of its conceptual framework project, before then finalising the revised accounting for leases.

EFRAG is requesting comments on the draft comment letter by 6 September 2013 (comments on ED/2013/6 close on 13 September 2013). Click for access to the full draft comment letter (link to EFRAG website).