WASHINGTON, DC-The US Financial Accounting Standards Board and the International Accounting Standards Board expect to have a new lease accounting rule ready for the end of the first quarter. Theoretically, all the pieces are in place for this to happen: the Exposure Draft was duly released in May, followed by a comment period that ended in September, to which numerous stakeholders responded.

Trouble is, many of those responses were critical, calling the proposed standard unwieldy, too expensive and not likely to meet the intended goal of providing more transparency to investors about lease obligations. Where that leaves companies that must account for leases on their balance sheet--a significant community in the commercial real estate space--is unclear. The standard-setting bodies have been aiming for this goal since 2006, unable to get to a consensus. The next few months will be very interesting to watch.

The latest sign that all is not smooth sailing with the lease accounting standard came in a report in the Wall Street Journal last week. FASB Chairman Russell Golden said that the compromise struck with the IASB allowing companies to record their leases in two different ways was proving to be problematic. Briefly, leases would qualify as either Type A and Type B. The latter are most likely to be used by real estate companies, as it would allow for a straight-line expensing method with the asset returned to the owner at the end of the term. Golden told the WSJ that the difficulty with this two-type approach is that there is too much discretion left to managers in deciding which type the lease is.

Some in Congress are also expressing concerns about the direction of the forthcoming standard. Rep. Brad Sherman (D-CA) has written to both standard setters about the project. He told NAREIT's Reit.com that the rules will probably bankrupt hundreds, if not thousands, of companies because they will be in violation of their loan covenants, and their banks will not renew the credit. It will also put unprecedented power in the hands of the standard-setters, he said.

"If the FASB goes forward adding $2 trillion to balance sheets, then they are exercising governmental power in a way every bit as significant as actions taken by Congress and the well-known federal agencies," Sherman told Reit.com. "They are in the league of the SEC, the FTC, the EPA and the United States Congress itself in terms of the power and the effect."

Sherman's proposed answer to is to rely more on footnotes to make the relevant disclosures to investors.

There are signs of dissent within the FASB as well. In September, FASB's Investor Advisory Committee told the standard-setting body they had concerns over the proposal, which it called "overly complicated" and that it should be discarded in favor of just adding new disclosures to the current standard.