Guidance on auditing fair value of share options.The Public Company Accounting Oversight Board The Public Company Accounting Oversight Board (or PCAOB) (sometimes called "Peekaboo") is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. has issued a staff Q&A about auditing the fair value of share options granted to employees. The guidance provides direction for auditing a company's estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of the fair value of stock options granted to employees pursuant to Statement of Financial Accounting Standards No. 123 (Revised), Share-Based Payment (FAS 123R). FAS 123R became applicable for financial statements of companies with fiscal years ending on or after June June: see month. 15, 2006. The Q&A addresses auditing the fair value measurements associated with determining compensation cost. It also highlights risk factors that auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together should be aware of and addresses the auditor's consideration of the process for developing a fair value estimate, significant assumptions used in options pricing models and the role of specialists in fair value measurements. The guidance is available at www.pcaobus.org/Standards/Staff_Questions_and_Answers/index.aspx. |
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