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Stock options rule decided but delayed

The long-running debate over how US companies account for stock options took both a step forward and a step back at the latest meeting of the Financial Accounting Standards Board.

The Board voted to delay the implementation of the accounting rule ? which will force companies to deduct the cost of employee stock options from profits ? by six months to June next year. But it also remained firm on the wording of the rule, refusing to change how stock options should be calculated despite fierce opposition from the US technology industry.

The Securities and Exchange Commission was instrumental in both moves, with chairman William Donaldson supporting the proposed rule but also joining companies and auditors to push for a delay to implementation. Many feared that US corporates would be unable to cope with accounting changes from both FASB and the Sarbanes-Oxley Act, both of which were due to come into force at the beginning of next year.

The rule is now set to be finalised in the next couple of months, with its bill already passed by the House of Representatives and supported by a majority of the Senate. An opposition bill to stop the stock options rule has also been blocked by Richard Shelby, the chairman of the Senate banking committee.

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