New Reporting Standards to Reveal Differences on Share Options - Report
The arrival of new Reporting Standard, IFRS 2, will force companies to accept significant changes to their organisation, according to a report by PricewaterhouseCoopers. The standard will mean that costs relating to share-based payments have to be measured and recognised in the income statement. Previously under IFRS, only the nature and terms of share arrangements had to be disclosed and recognition was voluntary, making a charge in the income statement something of a rarity. Ian Wright, Global Corporate Reporting Leader at PricewaterhouseCoopers, commented: ‘[The standard] will highlight important differences between companies – today, earnings look the same for companies that use share options extensively and those that do not.’ Analysts will show a keen interest in the amounts that will appear in the income statement, said PwC, as companies may need to move quickly to determine the effect of the standard, before the implementation date of 1 January 2005, added PwC.