IASB Votes To Require Expensing of Stock Options

The International Accounting Standards Board (IASB) voted at its meeting in London to publish an exposure draft of a proposed international accounting standard (IAS) that would require the expensing of stock options. This treatment differs from U.S. generally accepted accounting principles (GAAP), which permit (but do not require) expensing.

IASB member Mary Barth, a professor of accounting at Stanford University, predicted the decision would put pressure on American businesses and regulators to conform with IAS. She is quoted in the Washington Post as saying, "there is enormous pressure these days for what is called convergence -- which means having all global accounting bodies use the same rules."

But James Leisenring, who served several terms on the Financial Accounting Standards Board (FASB) after being its staff technical director for yeas, was more skeptical. "I would guess that the FASB will wait a while on this," he said, noting that the IASB has to issue an exposure draft and allow people to comment on the draft before the IAS is finalized. "I think the American board will wait and see what reaction there is to today's decision before it does anything," he said.

The IASB's tentative project schedule calls for issuance of an exposure draft in fourth quarter 2002. Members of the board suggested the final rule would likely officially take effect sometime in 2004.

Many U.S. companies have opposed the expensing of stock options in the past. In fact, Financial Executives International (FEI) has devoted a Web site to the subject to help financial executives understand IASB's actions and FEI's position. The site also provides information about the positions other groups are taking on this issue.

-Rosemary Schlank

You may like these other stories...

A proposal issued by the Governmental Accounting Standards Board (GASB) last week explains how fair value measurement should be defined for state and local government financial reporting.The exposure draft, Fair Value...
By Jason Bramwell The board of trustees of the Financial Accounting Foundation (FAF) finalized a new policy on November 19 that provides the Governmental Accounting Standards Board (GASB) with direction on what...
By Jason Bramwell The Governmental Accounting Standards Board (GASB) is now offering a free online toolkit designed to assist preparers and auditors of state and local government pension plans with implementing new...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.