Corporate Focus Now Meets FAS 123R Option Expensing Regulations
The new software includes option expensing to meet FAS 123R valuation regulations, Two Step said. FAS 123R rules require financial institutions to recognize in their income statement the grant-date fair value of stock options and other equity-based compensation issued to employees.
The new Corporate Focus release will now be able to calculate that valuation according to FAS 123R guidelines. The newest version of Corporate Focus, containing support for FAS 123R valuation, will be available to customers November 30, 2006.
“According to FAS 123R, effective for fiscal years starting January 2006, most companies that have stock options must include the ‘fair value’ of those stock options in their income statements as an expense item,” said Two Step President Gary D. Levine. “It is extremely challenging to calculate the fair value of, for example, 500 stock options given out to 50 employees that vest over 5 years. The latest release of Corporate Focus software will be updated with an option expensing feature that will provide companies with that calculation under the new FAS 123R rules.”
This new release is aimed at CFOs who need to report their financial statements to investors or stockholders in accordance with Generally Accepted Accounting Principles, Levine said.
“Recent legal battles over stock option backdating have brought attention to the care that is required for option administration as it relates to new tax and accounting rules. This only adds to the concerns over good corporate governance principles that led to the creation of Sarbanes-Oxley (SOX), in the wake of the Enron scandal," Levine said.
He said Corporate Focus brings together complex stock option tracking and detailed tracking of corporate governance information. Unlike other products that only focus on one aspect of corporate governance, such as tracking numbers for a stock option plan, Two Step’s Corporate Focus brings all critical detail and legal documents together - helping companies ensure proper records management so that they are both in compliance and ready for the next equity or liquidity event.