The IASB has taken up the gauntlet to draw up a standard on employee share options since nations’ individual attempts have consistently been met with a wall of corporate resistance.
The greatest pressure has come from the US business lobby, one of the most powerful lobbying machines in the world. The US standard setter tried previously to push through a standard to measure the cost of share options. It was unceremoniously defeated. And despite feelings in the US and in the UK continuing to run high on the matter, Sir David Tweedie, chairman of the IASB, is determined to set a standard.
The move to put share options at the top of the IASB’s agenda is indicative of Sir David’s determination to develop a new set of standards to match new business methods despite controversy and resistance.
Sir David said: ‘The IASB was formed with a clear mandate – to promote convergence on a single set of high-quality, understandable, and enforceable global accounting standards. This is the first step towards that goal.’
After talks with the new Standards Advisory Council, national standard setters and regulators, the IASB has set an initial work agenda of nine topics.
Leadership and convergence topics include accounting for insurance contracts, business combinations, performance reporting as well as share options. Projects to allow easier application of the newly named International Financial Reporting Standards – which will replace international accounting standards, or IASs – include guidance on first-time application of IFRSs and activities of financial institutions.
Three project intended to improve IFRSs will be a preface to IFRS, improvements to existing IFRSs and amendments to the controversial IAS39.
Changes to the controversial IAS39, recognition and measurement of financial instruments, were not expected until after the 2005 deadline for European companies to fully comply with IFRSs.
National standard setters from the now defunct G4 + 1 group will work on 16 other projects.
Sir David said: ‘This shows the strength of our liaison relationship with national standard setters. We intend to operate as a partnership. We could never deal with all of these issues alone, but we can pool resources, monitor each others work and develop new standards together as we seek to remove the major difference between our existing standards.’
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