FAS 123R Year-End Reporting: Will Your Auditors Catch You Off Guard?
Create auditable stock option records and comply with FAS 123R in five easy steps.
November 1, 2007
Sponsored by Two Step Software, Inc.
by Gary Levine
In the past few years, there has been a perfect storm of stock option administration and accounting challenges starting with Sarbanes-Oxley in 2002, FAS 123R in 2004, stock option backdating scandals in 2006 and the final IRC Sec. 409A regulations in 2007. Most importantly, the new Financial Accounting Standard (FAS) 123R moved equity compensation expense for most companies from a pro forma footnote to a line item in the income statement.
In light of the current environment, auditors are using much higher standards and CFOs are struggling to integrate stock option administration, tax and accounting reporting and good corporate governance practices. During the first audit season under the new FAS 123R regulations, many companies found themselves with insufficient recordkeeping that made calculating stock option related expenses difficult, time-consuming and subject to error. Transactions were not recorded properly nor well documented and there was no audit trail to follow.
Corporate attorneys, general counsels, CFOs and stock plan administrators now realize that in order to satisfy the higher levels of scrutiny and comply with the new stock option expensing requirements, they can no longer rely on error-prone, manual spreadsheets. Instead, they are looking to implement automated FAS 123R solutions capable of simplifying the process while providing critical information faster and with greater accuracy and accountability. More specifically, financial executives now require systems that enable all participants to rely on the same set of consolidated records and be capable of combining stock plan administration, stock option expensing, and corporate governance management.
A Five-Step Framework to Impress Auditors and Ensure FAS 123R Compliance
Today, financial executives are looking to gain a greater understanding of how FAS 123R applies to them. Instead of continuing with a manual approach that is subject to potential errors and increased scrutiny, organizations should consider these five steps to simplify FAS 123R compliance and satisfy their auditors:
Click here to continue reading this article.
About Two Step Software, Inc.
Founded in 1995, Two Step Software, Inc. develops, markets, and supports Corporate Focus™ and Equity Focus™, market leading corporate governance and stock plan administration solutions used by financial executives, stock plan administrators, law firms and corporate legal departments. For more information or to arrange a complimentary demonstration, please call (800) 223-8900.
Gary D. Levine is the President and Founder of Two Step Software, Inc., which provides corporate governance and stock plan administration solutions. He was previously the General Counsel of Pilot Software, Inc. and before that a corporate attorney at Hutchins & Wheeler in Boston, MA. Mr. Levine received his JD from the Boston College Law School and his MS from the MIT Sloan School of Management. He is the author of the popular blog “Capitalization Matters.” Contact him or visit Two Step on the Web at: www.twostep.com.