BusinessCorporate FinanceSupport grows for IFRS2 rule

Support grows for IFRS2 rule

Business support is growing for the new accounting rule on share options, which will make some organisations look significantly less profitable, new research has found.

Link: IFRS2 to hit company profits

Around two-thirds of businesses back international plans to require companies to book share options as an expense, a study by Mercer, the human resources consultancy, shows.

The findings mark a sea change in the attitude of British businesses to the accounting rule IFRS2, which requires companies to book a charge in their income statement reflecting the fair value of share awards granted to employees.

Of 70 respondents, 64% were in favour of the standard and its application, while over a quarter agree with expensing share options but not with the IFRS2 approach.

Only 9% were against expensing share options.

Phil Turner, European partner at Mercer, said: ‘Accounting for share awards and options has been highly controversial, so it is surprising to see such widespread support from companies. There now seems to be a sense of acceptance, and an appreciation that the standard will help to improve comparability of company accounts in Europe.’

‘IFRS2 represents a major change to previous accounting rules and companies will need to consider the wider impact on their share-based incentive schemes,’ he added.

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