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HR Magazine, November 2002 - Weighing Your Options: Legislative and Regulatory Updates

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While Washington insiders say that Congress is loath to legislate accounting standards, Senate Majority Leader Tom Daschle (D-S.D.) has promised to bring up a vote this year on a measure that would direct the Financial Accounting Standards Board (FASB)—the body that makes accounting rules for the United States—to take up a new project on accounting for stock options.

Without a congressional prod, FASB, on Oct. 4, issued an exposure draft (a proposed change to an existing accounting standard) that would do two things: First it would clarify the rules on transitioning from disclosure to expensing when a company voluntarily decides to expense. Second it would require more "robust and frequent" disclosure of stock option expensing in the financial footnotes. Currently companies are only required to disclose annually; the new rule would require that this be done quarterly. The comment period on this exposure draft closes Nov. 4, and FASB expects to issue the new rule by the end of this year.

The International Accounting Standards Board (IASB), which promotes harmonization of international accounting rules, also has issued an exposure draft of proposed rules that would require companies to expense options using the fair value method beginning in 2004. On Nov. 7, the board issued a statement for public comment by March 7, 2003. Jeffrey Mahoney, a project manager at FASB in Washington, D.C., says the FASB will put out an "invitation for comment" that will highlight the differences between the two rules. In the spring, FASB will review the comments and make a decision as to whether to develop a proposed rule change to harmonize the FASB standard with the IASB standard.  

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