PracticeAuditShare options threatened by new standard

Share options threatened by new standard

Finance directors could stop offering company share options to avoid volatility on their balance sheets if the International Accounting Standards Board pushes ahead with its proposals for a new accounting standard.

Not-for-profit making investment advisers Proshare, warned that FDs anticipate balance sheet fluctuations on the scale of those caused by FRS 17 standard on pensions, and could drop staff share options as a remedy. Diane Hay, chief executive of Proshare, said: ‘There will be volatility on the balance sheet so that FDs may not want to offer share schemes.’

Under IASB proposals, companies will have to charge share options to their accounts as an ‘expense’ – a move that most companies are fervently against.

UK plc’s resistance has been further strengthened by opposition from the European Commission and Unice, the pan-European body for business organisations, Accountancy Age can reveal.

The EC suggests that the IASB requires disclosure only, while Unice says that the proposals are ‘a step in the wrong direction’ and have not ‘sufficiently assessed the consequences’. The IASB will publish responses to the consultation next week. It hopes to issue an exposure draft before the end of this year with a view to publishing a new standard next year.

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