Norwalk, Conn. (Aug. 16, 2004) -- The Financial Accounting Standards Board appears to be moving ahead with its plan to mandate expensing for all employee stock options.

FASB this week is set to continue re-deliberations of its controversial March 2004 exposure draft on share-based payments. At a meeting scheduled for Wednesday, the board plans to discuss issues related to attribution of compensation cost and liability and equity classifications, one of the issues raised during the public comment period on the exposure draft.

Despite opposition from some members of Congress and many tech companies, the board expects to issue a final statement during the fourth quarter.

In late July, the House passed by a 312-111 vote a bill that would delay the FASB plan and would limit the expensing of stock options to those granted only to the top five officers of a company.

Under the FASB plan, publicly held companies would be required to expense the stock options they give employees starting Jan. 1, 2005, while private companies would have until Jan. 1, 2006, to start expensing stock options.

H.R. 3574, known as the Stock Option Accounting Reform Act, would limit expensing to a company's chief executive and four most highly compensated executive officers, and would delay the implementation of any rule related to the expensing of stock options until an economic impact study is completed. It would also exempt small business and would allow newly public companies to delay expensing for three years from the date they go public. The bill would also require the Securities and Exchange Commission to develop enhanced disclosure requirements related to stock option plans, stock purchase plans and similar arrangements.

-- WebCPA staff

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