Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Procurement topic
No spam. Unsubscribe anytime.
Town explains lease-accounting change that makes vehicle lease costs appear large this year
Summary
Staff said accounting guidance requires posting the full value of multi-year vehicle leases up front, which can inflate reported revenue and expenses in the year the lease is recorded even though cash flows occur over time.
Finance staff told the council that new lease-accounting treatment requires recording the full five-year lease obligation when the lease is initiated, which can make a single fiscal year show both large lease revenue and matching expenditures on an accrual basis. The presenter said this accounting treatment can make multi-year lease programs look as if they dramatically increase that year’s revenues and expenses even though cash flows are spread over the lease term.
Councilors asked about number and cost of vehicles in the lease program; staff said the town has been moving toward leasing more vehicles (one per officer for take-home vehicles is in the program and some older vehicles remain owned). Staff will return with a detailed list of leased vehicles and a multi-year cost/impact analysis for the budget meeting.
