IASC sets stage for share-based standard
The International Accounting Standards Committee has published controversial proposals to make companies include the cost of using share and share options in the profit-and-loss account.
The news comes after the UK Accounting Standards Board last week published its discussion paper on share-based payment. At present, the cost of an option is only reflected in the p&l account if the option price is lower than the price at which the shares are trading.
Sir Bryan Carsberg, secretary-general of IASC, said: ‘Accounting for share-based payments is an area of increasing importance internationally. As more companies enter public ownership the existence of share-based payments is growing rapidly.
‘The proposals in the UK have caused much concern among high-tech companies that have increasingly used this method to reward staff at a time when they are making little or no profit.’
The publication is a result of G4+1 group, a club of standard-setting boards from Australia, Canada, New Zealand, the UK and the USA, as well as the IASC.A similar proposal recently published in the US prompted a backlash from the business and political arena, resulting in a watered-down proposal that only demands disclosure.
‘The United States has had accounting standards in place for a number of years, but their most recent standard, was extremely controversial,’ said Sir Bryan. ‘This Position Paper draws on the US experience as well as recent developments in other countries and should aid the convergence of accounting standards for share-based payments.’
Comments on the proposal are to be submitted to IASC by 31 October 2000.