What New FASB Guidance on Stock Compensation Means to Your Company
The Financial Accounting Standards Board ("FASB") has launched a tightly-focused initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. The goal of the simplification initiative is to identify, evaluate, and improve areas of Generally Accepted Accounting Principles ("GAAP") for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.
The amendments within this update affect all entities, public and private, that issue share based payment awards to their employees. As a result of this change, companies can expect greater volatility in both Net Income and Earnings per Share ("EPS") upon adoption. To understand how this volatility will impact both internal and external stakeholders, companies must first understand the changes prescribed by the standard. This will require updates to systems of records, financial systems and financial models to report and leverage greater use of scenarios to forecast ranges for Net Income, EPS, and Cash Flow.Download Now