The Securities and Exchange Commission (SEC) announced on Thursday that large public companies won't have to expense options until the fiscal year beginning after December 15, 2005.
The rules, issued by the Financial Standards Accounting Board (FASB), were have gone into effect for large firms in the first quarter starting after June 15, 2005. The deadline for smaller firms has always been the first fiscal after June 15, 2005. The change effectively allows both large and small firms operating on a calendar year, to begin expensing options at the start of a fiscal year rather than in the middle of one. Large firm who operate on a fiscal year beginning or ending on June 30, however, must comply with Statement No. 123R when filing financial statements with the SEC for the quarter beginning July 1, 2005.
âThe accounting required by Statement No. 123R represents a significant improvement to U.S. generally accepted accounting principles, and the implementation of that standard will improve transparency for investors. Feedback from public companies, accounting firms and others, however, indicated that implementing Statement No. 123R in a period other than the first quarter of a fiscal year could make compliance more complicated for companies and comparisons of quarterly reports more difficult. Concerns were also raised that the accounting staffs at companies and accounting firms already have been stretched thin by other compliance responsibilities, such as internal control fiscals. In addition, implementing the new standard at the beginning of a fiscal year allows companies to change their accounting systems in a more orderly fashion, and should allow auditors to conduct more consistent audit and review procedures. Companies that choose to [expense options] earlier than required are encouraged to do so,â stated the SEC's Chief Accountant Donald Nicolaisen in a press release announcing the delay.