Guidance on auditing fair value of share options.The Public Company Accounting Oversight Board has issued a staff Q&A about auditing the fair value Fair Value 1. The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies.2. In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period of time. of share options granted to employees. The guidance provides direction for auditing a company's estimation 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 15, 2006. The Q&A addresses auditing the fair value measurements associated with determining compensation cost. It also highlights risk factors that auditors 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion