Financial Reporting Standard 20 ‘Share-based Payment’ (FRS 20) and its identically worded international equivalent, IFRS2, have dramatically changed the way companies account for share options granted to employees.
FRS 20’s requirement to charge the P&L account with the fair value of share options granted to employees will have a significant impact on the results of many companies. It means companies will need to obtain a formal valuation of the options granted to employees.
Mazars' Financial Reporting Advisory team helps companies understand the accounting implications of the new rules and, in conjunction with our actuarial department, provide share option valuations.
The valuation service we provide reflects factors specific to employee share schemes, such as market performance conditions (modelled using Monte Carlo simulation by our actuarial department) and sub-optimal performance, and is designed to withstand the rigorous scrutiny of auditors, investors and regulators.
