Lease Accounting Practice of Leasing Companies in Bangladesh: a Lessor’s Disclosure Perspective

Lease Accounting Practice of Leasing Companies in
Bangladesh: A Lessor’s Disclosure Perspective

Taslima Nasreen
Mosammet Asma Jahan

Abstract: As the development process in financial sector proceeds, Non-Bank
Financial Institutions (NBFIs) became prominent alongside the banking sector.
The major business of most NBFIs in Bangladesh is leasing. Lease accounting is a form-driven standard. The Institute of Chartered Accountants of Bangladesh (ICAB) recently adopted a revised accounting standard No. BAS 17: (Leases) on 18
November 2003 effective from January 1, 2004. This article highlighted the present state of accounting for lease in Bangladesh, an analytical review of disclosure requirement of BAS: 17 and extent of compliance with the disclosure requirement of BAS: 17 from the lessor’s point of view. Findings of this report indicate that the degree of correspondence between the standard per BAS 17 and actual reporting by the leasing companies in Bangladesh is not satisfactory.
Keywords: Lease Accounting, Lessor, Non-bank financial institutions.

Introduction
Non-Bank Financial Institutions (NBFIs) play a significant role in meeting the diverse financial need of various sectors of an economy and thus contribute to the economic development of the country as well as to the deepening of the country’s financial system. According to Goldsmith
(1969), financial development in a country starts with the development of banking institutions.
As the development process proceeds, NBFIs become prominent alongside the banking sector.
The major business of most NBFIs in Bangladesh is leasing, though some are also diversifying into other lines of business like term lending, housing finance, merchant banking, equity financing, venture capital financing etc. Lease financing, term lending and housing finance constituted 94 percent of the total financing activities of all NBFIs up to June 2006. Industrial
Promotion and Development Company (IPDC) was the

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