The current accounting for leases is an often-used example of accounting guidance that allows for structuring opportunities, which result in many assets and liabilities being off-balance sheet. We do not believe that economically similar arrangements should receive different accounting nor do we believe a small difference in economics should completely change the accounting results. We believe all lease transactions should be accounted for using a single model that results in the recognition by a lessee of an asset for its right to use and a liability for its obligation to pay rentals.

We have spent a considerable amount of time discussing this issue and reached out to many professionals within the DTT network to gather thoughts about how the boards should best move forward with this project. In so doing we have, through our network, also received comment from various external organisations having experience in this area which have helped us form our views. Many have expressed concern about the significant cost and effort that will be required to apply the proposed model, particularly system changes and procedures that will need to be put in place.

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