NORWALK, Conn. (HedgeWorld.com)–The Financial Accounting Standards Board issued an exposure draft of an amendment to Statement of Financial Accounting Standard 123, “Accounting for Stock-Based Compensation – Transition and Disclosure.”
SFAS, adopted in late 1995 after sometimes rancorous debate, urged but did not require that compensation costs arising in connection with options granted to employees be measured and reported in the issuer’s income statement.
The exposure draft still would not go so far as to require such expensing (what it calls the fair-value system). But it would require more prominent disclosures about the method of accounting for stock-based employee compensation and would affect the method adopted on both annual and interim financial statements. It would also provide three methods of transition for companies that voluntarily agree to report the effects of such compensation in their financials.
The comment period will conclude on Nov. 4, 2002. The FASB plans to issue the amendment by the end of this year, and its provisions will be effective immediately upon issuance, with the proposed disclosures to be provided in annual financial statements for fiscal years ending after Dec. 15, 2002.