Support grows for IFRS2 rule

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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