Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here today with Ryan Istre, an audit director and a member of the PKF Texas SEC team. Ryan, welcome back to the Playbook.
Ryan: Thanks, Jen. Appreciate it.
Jen: So, I’ve heard FASB is making some changes to share-based payment accounting. What do public companies need to know about this?
Ryan: Changes to the share-based payment accounting is happening pretty soon. A lot of companies will issue share-based payments to some of their employees, sometimes they’ll issue it to some of their consultants, and in the past, the accounting for those two may differ significantly.
Jen: It seems like that would be a little bit confusing to companies.
Ryan: It could be. The FASB issued this new standard to try to simplify the problem of divergent accounting. Now, one of the items, for example, that’s going to change with the new rules is that the point in time when you have to measure and the amount that you have to measure the compensation at, was different if it was a non-employee versus an employee. And historically it was at the commitment date, and now it’s going to be at the grant date of the actual share-based payment, so that’s going to bring the two in line and make it a little bit simpler for companies to apply.
Jen: Sounds good. Now when is this actually going to be effective?
Ryan: For most public companies, it’s going to be effective starting January 1, 2019, but an earlier option is permitted.
Jen: And what do they need to do to get ready for that?
Ryan: They just need to assess how much share-based payments they issue to non-employees and determine whether it benefits them to early adopt or to wait until the normal adoption date.
Jen: Perfect, sounds good. Well, we’ll get you back to talk about some public company information.
Jen: For more about this topic, visit PKFTexas.com/SECdesk. This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook. Tune in next week for another chapter.