FASB To Delay Implementation Of Stock Option Rule

by Glen Shapiro, LawAndTax-News.com, New York

19 October 2004

Following a meeting last week, the US Financial Accounting Standards Board (FASB) announced that it has decided to delay for six months the implementation of a new rule which will oblige companies to expense the value of stock options granted to their employees.

The FASB revealed that the decision had been made following feedback to the exposure draft of the planned standard for the expensing of employee stock options from accountants and tax preparers, who requested more time, arguing that they also need to meet the demands of the Sarbanes-Oxley corporate governance legislation.

Speaking to the WebCPA news service last week, FASB spokesman Steven Getz explained that:

"What the board had to weigh up was the consideration of how the investor community was eager to have the effective date as soon as possible, whereas preparers felt they needed more time in order to implement any new standard."

"What ended up influencing the decision, in part, was that the board felt that companies are feeling a lot of pressure to implement Sarbanes-Oxley 404 for the first quarter, combined with the fact that the board wanted to be sure to give companies sufficient time to absorb the new standard and to apply it appropriately. The board felt that delaying the effective date by six months is the best position to take."

The proposed rule is now set to come into force on June 15, 2005.

Recommended