Your base year audit rights are about to get more important. The FASB and IASB's proposed changes to lease accounting standards, including their recent revisions to those proposals, will mean tenants who ensure their base year taxes and operating expenses are as high as possible will not just enjoy the improved cash flow and GAAP/IFRS-based profitability they currently realize from base year audits under the existing rules. Going forward, a successful base year audit will also serve to reduce the asset and liability balances recorded on the tenant's balance sheet. Since the new accounting standards will effectively capitalize the net rental payments (i.e., base rent less the base expenses embedded in those rent payments), any increase in the base year expenses will serve to reduce the net rent subject to capitalization and, in doing so, reduce the asset and liability balances on the tenant's balance sheet related to that lease. As an added bonus, by virtue of reducing the impact on the tenant's balance sheet, the tenant's profitability will see a larger improvement sooner than it does under the existing accounting rules! The message for tenants with base year leases: your horse is about to come in ... if you protect and exercise your base year audit rights!