SEC extends dates for stock option compliance.

In a move that The Wall Street Journal said "marked a rare instance of the SEC directly overruling the Financial Accounting Standards Board (FASB) on the details of a new accounting standard," The Securities and Exchange Commission (SEC) announced on April 14 the adoption of a new rule that amends the compliance dates for FASB Statement of Financial Accounting Standards No. 123--revised 2004, Share-Based Payment Statement No. 123(R). It does not change the accounting; it only changes the dates for compliance with the standards.

Instead of implementing the standard as of the beginning of the first interim or annual period that begins after June 15, 2005 or after Dec. 15, 2005 for small business issuers, the new rule allows companies to implement the statement at the beginning of their next fiscal year.

This means, for example, that the financial statements for a calendar year-end company do not need to comply with Statement No. 123(R) until the interim financial statements for the first quarter of 2006 are filed with the SEC. Those with a June 30 year-end, however, must comply with Statement No. 123(R) when the interim financial statements for the quarter beginning July 1, 2005 are filed.

In the press release, SEC Chief Accountant Donald T. Nicolaisen said of the change, "The accounting required by Statement No. 123(R) represents a significant improvement to U.S. generally accepted accounting principles, and the implementation of that standard will improve transparency for investors." He continued, saying that "feedback from public companies, accounting firms and others, indicated that implementing Statement No. 123(R) in a period other than the first quarter of a fiscal year potentially could make compliance more complicated for companies and comparisons of quarterly reports more difficult."

Additionally, Nicolaisen expressed that concerns also were raised that accounting staffs at companies and accounting firms already have been stretched thin by other compliance responsibilities, such as internal controls reporting.