FAS 123R OverviewIn late 2004, the Financial Accounting Standards Board issued statement 123R, making the expensing of all stock compensation mandatory. Units such as non-qualified stock options, restricted stock units, phantom stock, stock appreciation rights and any other stock based compensation would now be required to be recognized as expense in the Spring of 2005. In doing so, the FASB changed the way in which equity compensation would forever be recognized. FAS 123R and the SEC's response to it, SAB 107, set forth a road map for determining this expensing process. At the heart of this process is the determination of the value of each unit issued by a firm. Although the map is in place, the road is littered with wrong turns and dead ends. The subtle complexities of valuing and expensing Performance or Market-Based awards can leave many firms grasping for an answer. Even though many firms have dealt with these and other issues related to FAS 123R for several years now, the process has not become cleaner, simpler, or faster. With this said, what can firms do to make the process smoother? What can firms learn from the audit experiences of other firms? And, how can firms lower their overall time and cost of compliance? |
